The broader indexes continued their bounce off of Friday’s lows and started the week on a bullish note. While today’s price action was certainly bullish, the move higher came on the 2nd lowest up volume since January 12th. Couple that with the fact that all of the major indexes (except the NASDAQ) were rejected near their highs from last week and we don’t think you can get too excited about the move today.
In a momentum market, and we would argue that anytime an index rallies 20% in a short amount of time that is the definition of momentum, the name of the game is breaking the most recent highs. The most recent highs coming into today were Thursday’s highs, and they were not broken today. If you’re playing the momentum we recommend waiting for a break above those highs before positioning for further upside in the market.
One trade that continues to work is the tech trade. The NASDAQ tagged fresh 10 year highs led by a couple of names we suggested traders target:
A few stocks that appear to be at the forefront of this bullish momentum in the tech space is IBM, AAPL & PCLN. All three stocks have unmistakable long term uptrends in place and are either at or within striking distance of all time highs. They all also weekly options with good liquidity which makes for great day trading opportunities. We recommend continuing to view these stocks, and the tech space in general, with rose-colored glasses.
- @ the bell 1/31/12
Two of those three stocks, AAPL & PCLN hit new all time highs today. PCLN was especially bullish, moving over $25 or 4%. We suspect that resistance will soon come into play with these stocks but we have seen nothing to believe their underlying long term bullish trends won’t remain very much in tact.
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Related posts:
- SH @ the close 10/28/2011: Markets take a breather; SPX up for 5th week in a row
- SH @ the close 9/30/2011: Markets erase gains for the week, break key levels
- SH @ the close 12/16/2011: Markets limp into the close to end the week
- SH @ the close 1/3/2011: Bulls flex muscle to start 2012; SLV surges
- SH @ the close 12/2/2011: Largest one week rally since March 9th, 2009
