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Big Cap Tech Looks Strong

Sunday, 07 August 2011 10:33

I study charts a lot! Some would say it is an addiction but I like to think of it as passion and I understand that there is a direct correlation between the effort I put in to trading when the markets are closed and success when the markets are open.

So here I sit on a humid Sunday morning having worked out early and studying some charts while my son gets ready for hockey practice, looking at lines, candles and formulating opinions. I go through 300 charts, my list is ordered by how active I am in each name, first name is my most active and 300 is my least active.

The first thing I notice is that AAPL, BIDU, AMZN and GOOG are just about the best looking charts of the whole lot with their Friday closing prices above most of their moving averages, which is rare in my list of names. That is certainly a good sign as big cap tech is a great leadership group. Then I get to GS, BAC, JPM and the world looks a lot worse. Financials are a huge part of this market and right now I need to go to the weekly charts just to find some support.

NVDA, AKS, X look horrible, similar to the financials, quick look at IWM, SPY, DIA and QQQ give a glimmer of hope with the way the markets rallied into the close on Friday. The indices are very oversold, the MACD histogram is wide (a sign of potential reversal) but of course US Debt was downgraded Friday night and there is no telling which way the markets will react.

Gold has the potential to rally $100 on that news.

If you feel the need to buy this market, go with strength. Find names that where the charts look good, there will be time to buy the laggards if there are some real legs behind any rally. I am planning on shorting strength until I really see positive markets. I went home flat over the weekend and glad I did.