Contrary trading is critical in this environment; here’s why.
First, you have to know what’s leading. Then you need to apply this second and third thing.
The double top in the S&P was just the beginning. Double tops at all-time highs will test the conviction of buyers who are standing on shaky ground after significant miss in ISM.
The sell-off in the equities market will be tested tomorrow, since follow-through to the downside has been difficult to come by. If the buyers are spooked by the ISM data, then our watchlist is going to be built to take advantage of risk-aversion.
The breach/retreat with directional bias approach worked perfectly, and here’s how I set these up each morning.
I outline the details of today’s breach and retreat as well as HPMRs and walk through what the crude oil and copper markets say about what we could see in the next few weeks.
I like the pullback we are seeing in SMH, and I like a couple of relative strength names for a potential trade for the run into earnings. Let’s look at SMH, LRCX, TXN, and AMAT.
