The bulls get the benefit of the doubt because the action clearly expresses a willingness to bid up share prices. The tape tells the tale. NASDAQ leads. Technology stocks have assumed a leadership role as energy and metals take a back seat. I sold all the gold stocks and reduced energy holdings. I took some chips off the table across the board into the strength of the current rally. Markets in Europe trade down, while Asian markets completed a robust session last night. Futures are trading down and the open will likely be moderately soft. The SOX ought to be watched closely because a rise above 500 will bolster confidence and inspire even greater buying power. A failure to go topside 500 will likely cause selling pressure stifling the current positive action expressed within the tech space.
XM Satellite Radio (XMSR) 16.38
It’s where it closed last night. I have a piece of it. I would not chase it in here. The way to play it is to let it come to you. That is the proper way to play the trade. Let XMSR come to you after the buying frenzy subsides. It trades in a powerful advance that ought to ultimately test the 20 zone. It is appropriate to buy coming into the 16 zone. XMSR is a leader this year. Last year it lagged. This year it leads. It is currently up over 16% this month.
Charles Schwab (SCHW) 20.19
SCHW broke out yesterday in decent trade when it closed above 20.10. That is where support is. It is a timely buy and if this market gets into a higher gear then the current advance will be more powerful than it already is. The trend is clearly bullish.
NVIDIA Corp. (NVDA) 34.55
I am short NVDA. The reason for the short is in its price pattern over the last 50 days. It currently trades below its 50-day moving average and NVDA has a pattern of intermediate term slumps that a nimble trader may exploit. It is a good short on a swing. I am using the 50 day line at 36.01 to stop it. It is a good short up to 35.80.
United Parcel Service (UPS) 73.70
There is only one reason to sell UPS short. It is declining. It is in decline over the last 200, 50, and 10 trading days and a close below 73.50 is a signal to come at it hard. A toe in the water is appropriate so that it is watched because it could close below 73.50 today. If it does then take it home short into the weekend. Stop it at 76.51.
Jack Rothstein is an SEC-registered investment advisor who has been analyzing, buying and selling stocks for more than 19 years. For a free 30-day trial subscription to the Wealthcast Stock Market Letter & Snapshot Service, click here.
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