The major stock indexes traded back and forth the unchanged level today, with modest gains going into the close run on ever-decreasing volume.
Officially, the Dow Industrials closed flat on NYSE volume of 3.5 billion shares, while the NASDAQ advanced 0.8% on 1.6 billion. The leadership profile remains positive, with 673 stocks making new highs versus 81 making new lows.
The short term momentum oscillators remain positive, confirming the bullish stance of the AlphaKing Trading Indicator for the NASDAQ. We have new trades below.
Nothing changed today, with overseas markets consolidating after suffering steep declines of late, while the US stock indexes completed a four rally sequence, with a reversal of such gains common after day four blow-off runs complete.
The Russell 2000 AK trading indicator has turned positive, and thus we are beginning to add some select long positions to our portfolios, though being very wary of the four day rally phenomena.
With that danger in mind, we will continue to hold onto our short positions as we expect a pullback to commence right here, even if the new buy signal for the Russell proves to be a great one. Tomorrow is a half day ahead of the holidays, and the low volume usually makes such days meaningless from a technical perspective, thus we will hold off from making any changes to our portfolios other than the new buys for tomorrow. We will reassess after the close on Monday, and become either aggressive long traders or more aggressive on the short side, as we get to see how next week starts. Risk remains extreme for both the bulls and the bears.
401K investors should be invested in a money market fund, though we may have a new trade early next week.
Kevin Wilde, Chief Trading Strategist AlphaKing.com.
