April 5, 2004
On Friday, the Nasdaq gapped sharply higher on the mother-of-all Jobs Report. It quickly reversed and began to sell off. However, it found its low fairly early and then generally worked its way higher for the remainder of the day. This has it closing well (on its highs, in fact) and puts it above its 50-day moving average.
The S&P wasn't quite as impressive but did manage to close well. This action puts it above its 50-day moving average. It also has it right at its .786 retracement level from the 03/05 high (which also corresponds with overhead resistance).
So what do we do? Well, last night I couched my commentary by saying that the jobs report could throw a wrench into my analysis. And, it did (to say the least!). So, the $64,000 question now becomes, does this change everything? I don't know. Follow through will be key. For now, this action has the market super duper overbought (if you're new to this column, my apologies for using such technical terms). And, as you know, it's never prudent to buy in this situation (okay, it would have worked on Thursday, but in general, it's usually not a good idea).
If you were fortunate enough to have some longs, take some profits off the table and then pat yourself on the back (there's no need to send me an email telling me that I was wrong and you were right--just remember the sun doesn't shine on the same dog's ass everyday). On the short side, with the market overbought, you might look to fire off a trade or two. However, don't fight the stupidly strong tape--wait for entries.
Looking to potential setups, for the aggressive, Arrhythmia Research Technology (HRT), mentioned recently, still looks poised to continue its slide out of a pullback from lows. |
