Bullish PRICE Action:
As in life as well as the markets, it doesn’t matter where you start, but where you finish. The old adage goes “amateurs open the markets and pros CLOSE it”. On the chart of the XLK below, one can see 3 of the last 5 sessions CLOSING in the upper half of the daily range. Now we are still well below the 200 day SMA, and deep into bear market territory with the fund down 27% from most recent 52 week highs. Keep in mind this is happening with coronavirus headlines that are seeming to get worse, with deaths in Italy surging, New York cases on the rise, etc. What is most likely happening is that a couple months ago everyone was laughing about the situation, underestimated it, and now the pendulum has swung in the opposite direction and I wouldn’t say we are overestimating it, but we are coming to grips with reality, and the impact of being shocked by headlines is lessening. Sure this may not be the case next week or so, but we shall see. Some other positives to focus on is FDX quietly on a strong 3 day winning streak. Shorts who did not cover got a bit greedy, and will the pendulum that is now swinging in the bulls favor, be transitory or long lasting? Follow the PRICE action.