Markets did what they like to do best Tuesday, confound the most. Perhaps it is as simple as K.I.S.S. Keep it simple stupid. The trend is your friend and it happens to be up. The Nasdaq decided to come out and play Tuesday as it bounced off the precise 4500 handle. Remember those round numbers are battlegrounds. Both the Nasdaq and S&P 500 rose .8% for the day. Volume could have been more energetic, and although many say volume has been overall soft, it could be compared to recent prior sessions to gauge the strength of buying power. The big gains were courtesy of some of the weakest recently, namely energy. They were so oversold they were due for a bounce, and bounce they did. Throughout the entire group you would be hard pressed to find many names currently above their 50 day SMAs. Even the best of breed names, and that speaks volumes about the groups muscle. Best of breed names that bounced off of key moving averages that we highlighted recently were PXD and EOG. PXD caught its breath at its 200 day SMA and just above the round 200 figure. It is setting up a double bottom trigger that can be added to or to open a new position at 231.21. The pivot is south of the 50 day SMA which does make it somewhat failure prone. We like EOG better, and full disclosure we are long, entering just above par last Wednesday after it did 3 things we liked all in one day. Reversed off its 200 day SMA, CLOSED above the round par figure and filled it its earnings gap to the penny on 5/5. Below is the chart we wrote early last week.
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