15May10:45 amEST

Not Thinking in Linear Terms

This morning's action in equities smacks of bears waking up from their recent hibernation and growling loudly as they search for food, as it seems as though it has been a while since we experienced a sharp opening gap down which held. 

However, in terms of the larger technical picture we are still keying off the 2,700 level on the S&P 500 Index as being a significant battleground which bulls likely need to defend to maintain their recent progress. And at the moment, we are roughly ten handles above that area.

Days like today also help to shed light on which names are truly turning around on a longer-term basis. Indeed, identifying "turnarounds" and changes in trend naturally lends itself to a given bias. 

But in the case of the small cap medical device play, CSII, on the first daily chart, below, the name is soundly in the green today as it flags above its 200-day moving average after a year-long correction. That is quite impressive, indeed, and compels us to stalk it closely as it was one our long watchlist for Members this week.

And then there is Under Armour, of course, on the second daily chart. UAA has far more eyes on it than CSII. But the outperformance is no less impressive today. This is the type of action bulls needed to see to better confirm their suspicions for a new change in trend. 

So while linear thinking would have us waiting for a green day in the market to consider even looking, let alone playing, beaten-down names like CSII UAA still trying to prove themselves, ironically it is a down day which reveals their underlying mettle. 

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