If there was a text book written about what we are watching, then I would say that today and the last several days went according to the text book. We dropped hard from the resistance at the top of our range, which is also around the major indexes 50 day moving average, and precisely at that point our momentum indicators hit their refueling point and headed down. Our fast momentum indicator dove first and now is the first to turn back up as the the indexes have bounced off the bottom of the range.
I am reasonably confident (note, you can never be more than reasonably confident when judging the markets), that we are not headed back to the top of the range and to see if we can punch through. If we reach that point with our slow momentum beginning its turn up, then my confidence will go up a tick. So long as the slow momentum remains in the neutral range, we are just re-charging. With the resurgence of Tech stocks in the last couple of days, it gives me even more comfort that the Bulls are about to become range busters. The Bull is not free off the range yet, so don't get overly aggressive.
For some trading ideas, check out our TradeWinds Top 25 lists and the update on our TradeWind Black Box.
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