I'll preface my comments about yesterday's market by saying that we can now basically forget about yesterday. The market's reaction to the CPI report has already wiped out most of yesterday's losses. In pre-market trading the QQQ is sitting just above yesterday's high, thereby trapping anyone that decided to get short yesterday. Look for some panic buying today, at least in the early going.
Although yesterday's selling got kinda ugly I still see it as just a normal pullback, especially on the S&P 500 and Dow. Both of those indices are still clearly in intermediate term uptrends. Both of those indices slipped under trendlines I've been pointing out, but I think they'll gap back over those lines at the open today. The NASDAQ looks a bit worse. It found support at its 200-day moving average yesterday, but slipped under its 50-day moving average. So it's essentially in no-man's land right now. It, like many stocks, is in the general vicinity of its middle Bollinger Band (BB). That basically means that it's in the middle of its range, and is neither over or undervalued relative to its recent prices. One of my gauges for if we're overbought or underbought is what percentage of stocks is above or below their middle BB. Right now it pretty close to 50/50.
So I think we're in a situation where you can make money on either, or both sides of the market. Having said that, I'm still not seeing many shorts that I like, but I'm finding plenty of longs. Below is an example of the type of set-ups I'm seeing. This is AMZN, one of the best looking long candidates I see today:
I'd be remiss if I didn't point out that this is expiration week, so expect some kind of nuttiness.
