TradeWinds for April 18th

We finished out a strong week on a strong note. All of our momentum indicators are very solid right now, but there is some concern that we are short term overbought again or close to it. But thats okay, that just means there will be another buying-opportunity-dip coming up soon.

DIA and QQQQ ripped through their resistance lines on Friday, SPY cam close. Now we need to see if they can hold above those resistance lines to make them support lines.

Its been funny to read articles this week once again debating whether we have put in a the market low, as though that really matters. The reality is the market is always going to go up and its always going to go down. The key is to find out how to tell when the market is most likely to go in one direction for a period of time that you can invest in. We think our momentum indicators give you real good short term (3-5 day) indications of the buying or selling strength that moves the markets. Let me add my two cents to the bottom debate. Obviously the most recent low was set back mid-March. From a momentum perspective the low was set in at the mid-January low. While the market continued down in price from for two more months, our momentum started rising, creating a divergence which told us when the price move up started we could be confident that it would be sustained. Go back and read our posts from mid-March on to see how we reported this unfolding rally.

In summary we are in sustained rally mode until proven otherwise. Its a broad-based move with only healthcare and pharma stocks lagging. Precious metal are also a little weak, but bear some watching to see if they come back to life.

Now check out our Top 25 Lists and the TradeWinds Black Box results.