Up, up and away in the aftermath of the Fed Day!
Stocks continued their short-squeezed (pre-holiday) rally to end the week at the highs, piercing the 2,070 index level.
Let’s update our chart, note the message from Breadth, and focus on strong (and weak) stocks to trade:
The Fed threaded the needle and told the market exactly what it wanted to hear with its policy announcement and guidance, sending bulls buying aggressively and bears (short-sellers) buying perhaps just as aggressively!
The result was a powerful trend day yesterday that (logically) continued today.
I don’t like the lengthy divergences at the new price highs – note momentum and TICK are weak (TICK has not pierced +900 today at the new highs – that’s a caution signal).
What is Sector Breadth revealing about the rally? Let’s discover together:
Virtually all sectors are participating in the broader money flow into the stock market, with Industrials and Energy topping the day’s gains (along with Financials).
This should generally be considered a bullish sign, especially since the “defensive” sectors (Staples, Health Care, and Utilities) are showing moderate strength on the session.
We have potential bullish trend continuation plays in the following stocks:
WYNN (back yet again), CarMax (KMX), Cintas (CTAS), and Teva Pharm (TEVA).
Potential downtrending candidates exist in stocks showing relative weakness today:
Finish Line (FINL), Hasbro (HAS), Mattel (MAT), and Iconix (ICON).
Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade