Stock Market Bullish Bias Continues
Stock-Markets / Stock Index Trading Sep 16, 2009 - 07:51 AM GMTBy: Mark_McMillan
Tuesday's market action saw volume increase on the NYSE as all of the major indexes put in new closing highs for 2009. The Dow led the other major indexes and was echoed by the Russell-2000 and the Semiconductor Index (SOX).
The TLT (Lehman 20-year Bond fund) slid quite a bit lower but never really broke the bullish uptrend it has been in. The Bollinger Bands are narrowing so it is possible the uptrend will be contained and a real battle could get started. If that is the case, we will try to take advantage of that with a trade (bullish or bearish, we don't care).
Trade Recommendations:
We weren't filled on our option contract sales on Tuesday so we will be patient here as we wait for the opportunity to enter a high probability trade.
Daily Trend Indications:
- Positions indicated as Green are Long positions and those indicated as Red are short positions.
- The State of the Market is used to determine how you should trade. A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will.
- The BIAS is used to determine how aggressive or defensive you should be with a position. If the BIAS is Bullish but the market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance. The BIAS tells you to exit that trade on "weaker" signals than you might otherwise trade on as the market is predisposed to move in the direction of BIAS.
- The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.
Commentary:
The Dow moved back into an uptrend state leaving the S&P-500 and SMH in trading states. All the indexes we have been monitoring still have a bullish BIAS. We don't like the action in the Semiconductor Holders (SMH) as they aren't correlating well with the other indexes and not even with the Semiconductor Index. Still, if we see an opportunity to profit from a reversal of a light volume pullback, we will likely enter a trade in the SMH in the near future.
We will stay with this trade until we an opportunity to trade a reversal, even if it is a short one.
We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to mark@stockbarometer.com.
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By Mark McMillan
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