The best thing that we can say about this week is that we are off to our recent lows. Equities rallied on Friday morning, but gave up some of their early gains. The NASDAQ action closed lower for the day, producing a distribution day on increased volume.
However, the other major indices all closed higher. The recent buying has been fueled by growing expectations of a Fed rate cut. Yesterday, we also saw oil prices fall further from their highs. It is not all rosy out there, as we have continued concerns regarding the housing market and credit markets. Consumer confidence has been staggered. I have seen mention in a few places about possible recession.
All of this creates a great deal of uncertainty. There are some bright spots, with leading stocks showing some resiliency admits all the selling. When markets are trending the ability to pick strong stocks is not always necessary to make money, as most science will tend to rise with the overall market. These consolidations will typically batter the weaker companies, pushing stock prices lower.
You can take a look at leading companies such as Intuitive Surgic and Apple Inc., and you'll see how they have maintained an upward trend despite the recent correction. Paying attention to the trend in the stock's behavior, or that of an index, it's critically important if you hope to stay profitable during these difficult market transitions.
If you need some help assessing the trend of a particular security, I would encourage you to take advantage of of the complementary trend assessment service provided by the guys at Market Club. This free service also makes for nice second opinion before jumping in.
Trade well!
Christopher Smith
TheOptionClub.com
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