That was a nice headfake today by the Nasdaq. It was still a very positive session post 1215pm EST breakout but the close sadly prevented us from getting what we wanted which was a legitimate signal to tell us to buy stocks.
Underneath, it was much more bullish as more and more stocks rallying on huge volume off the lows are entering my screens. On top of that, plenty of CANSLIM quality stocks continue to breakout and/or build bases. This goes along with the bank and homebuilder stocks attempting to build bottoms.
Obviously, as trend followers, we are going to follow the money and clearly via the current charts they are buying stocks. Just take a look at PEIX off the lows and PKT hitting new highs. Stocks are being accumulated.
A good trend follower is always ready for anything. So while we do enjoy the pretty green charts setting up in our scans (pretty green charts if you have Telechart and use BOP with your price and volume), we are ready for any outcome or black swan event. If the market crashes 10% tomorrow on the biggest volume ever, I will not be surprised.
Right now, the charts look better and better. Subscribers should go take a look at the stocks I listed as ‘possible future longs’ and ‘stocks off the bottom.’ There are a ton of charts full of heavy accumulation, solid price action, and green BOP. We have not seen this in a long time and if we do break higher it should be a nice rally.
Patience is still the theme with it finally being a stock pickers market again. We continue to keep all new long positions small relative to the methodology used when the market is trending higher. When we get the signal that the trend is firmly up, position sizes will increase.
Great luck, cut your losses, and let your winners run until you see technical problems. Price action rules. The rest is just noise.