Oil and energies continues to get pounded today. Many of the recent momentum stocks from there sectors were down huge, yet this is good news for the market, as it’s responding well to lower oil prices, and the major indexes all closed significantly higher.
Today’s market action was a very nice follow-through to yesterday, and could be an indicator of a strong rally to come. According to IBD, a follow-through day should occur between days 4 through 7 of an attempted rally. Today was only day two, and therefore a little early to count as a confirmed rally, but it is a good sign. See this IBD article for more information on follow-though days.
There were no triggers from the Watchlist, but yesterdays trigger moved nicely today.
The USO, an ETF which tracks the price of crude oil, closed below the 50-Day SMA. It is about to fill a gap, and could find some support here, but is looking very bearish here.
As I mentioned in the post from 07/06, I have been watching the Slow Stochastic of the S&P 500, looking for a cross of the 20 line. That would be my buy signal of the SPY. Just waiting for the %D line.
Tomorrow could be a rough day for the NASDAQ. Both GOOG and MSFT reported after hours today, and results were disappointing. Both were down significantly after hours. It’s also Options Expiration, so things could tricky tomorrow. Hopefully, the market will consolidate here and we’ll see some nice setups and a new confirmed rally next week.
Good luck and good trading!
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