Nasdaq Flashes The Golden Cross; Coiling The Spring For Another Rally?

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 2

I’m short on time this weekend so will keep the commentary to a minimum and just focus on the chart of the Nasdaq and what it might be telling us about where we’re headed.  The market is definitely showing some signs of fatigue recently but continues to digest gains in a very health manner and could very well be coiling the spring for another push higher, quite possibly to the next level of major resistance which in the the case of the Nasdaq is in the 1900 – 1947 range.  Note that the 50 day moving average has now crossed above the 200 day moving average, forming “the golden cross” which is a decent indicator of a bullish market. I still think we’re probably setting up for one last push of a few percent which would market the top of this leg up before entering a significant retracement phase. 

We’ll have to keep an eye on the possibility for another head and shoulders top formation similar to what we saw at the end of 08 and into 09.  A confirmation of that pattern could set us up for a possible test of the March lows, but I think the odds of that happening are quite slim.  An area where I’ll be looking to get considerably aggressive on the long side would be a successful test of support in the 1665 area.  For next week, I’ll be keeping a close eye on the top and bottom of the tight trading range in all the indices for an indication of shorter term strength or weakness.  For now, the trend up is still strong until proven otherwise.  No change in my strategy either . . I continue to trade the small to mid cap momentum plays particularly in the China and commodity areas, while looking for longer term hedging plays in both ETFs and individual stocks. The closer the indices get to major resistance (Naz 1900ish, S&P 1000ish and Dow 9088ish), the more aggressive I’ll be on the short side.

61409_nasdaq 

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The Self Investors Model Portfolio wrapped up 2006 with a gain of 27.6%, 2007 with a gain of 30.2%, finished nearly 35% ahead of the S&P in a very difficult 2008 and is off to a good start here in 2009, outperforming the S&P by 7%.  This is a REAL portfolio with position sizing and not based on extrapolated hypothetical gains for each trade.  On average, it beats the S&P by 20% per year. The result?

* Putting $100K into an S&P tracking index at the beginning of 2004 and you’re down more than $20K. 
* The Self Investors Model in the same time period would have more than doubled your money.  That’s the power of not buying and holding! 

When comparing the Self Investor Model Portfolio to the 535 Model Portfolios tracked by Hulbert Digest for annualized returns over the past 5 years, just four model portfolios produced better results and none of those used diversified approaches.

1. Cabot China & Emerging Markets: 22.2%
2. No Load Portfolios (Gold/Cash: 19.%
2. No Load Portfolios (Gold/Shorting): 19.9%
4. Outstanding Investments: 18.2%
    (focuses on oil & precious metals – did extremely well until it was crushed in the market crash)
::: >> 5. Self Investors Model Portfolio: 17.5%
(The SI portfolio isn’t currently tracked by Hulbert (and I’ve never looked into it) but every trade alert is sent via IM and email as well as tracked in a database which includes trade notes, position size and entry price)

** Astonishing fact #1: About a 1/3 of all model portfolios tracked by Hulbert Digest have not made a dime over the past 5 years!
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::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Toy & Hobby Stores: 9.45%
2. Aluminum: 8.60%
3. Dairy Products: 8.30%
4. Shipping: 8.00%
5. Banks – MidAtlantic:  6.90%
6. Property Management/Development: 6.45%
7. Recreational Goods – Other: 6.20%
8. Air Services – Other: 6.05%
9. Data Storage Devices: 5.05%
10. Confectioners: 5.00%

– Top 10 Worst Performing Industries For the Week –

1. Resorts & Casinos: -9.20%
2. Major Airlines: -7.90%
3. Health Care Plans: -7.20%
4. Sporting Goods Stores: -5.90%
5. Hospitals: -5.75%
6. Textile Manufacturing: -5.75%
7. Jewelry Stores: -5.35%
8. REIT – Hotel/Motel: -5.30%
9. Gaming Activities: -4.95%
10. Music & Video Stores: -4.95%

– Top 5 Best Performing ETFs For the Week –
(excluding leveraged ETFs)

1. iShares Sweden (EWD) 6.00%
2. PowerShares DB Base Metals (DBB) 5.60
3. US Oil Fund (USO) 5.45%
4. ING Global Equity Dividend (IGD) 5.10%
5. iShares Australia (EWA) 4.75%

– Worst 5 Performing ETF’s –

1. Holders Internet Infrastructure (IIH) -13.90%
2. Caribbean Basin (CUBA) -11.75%
3. Templeton Russia & E Europe (TRF) -6.10%
4. iShares Taiwan (EWT) -5.30%
5. PowerShares Dynamic Retail (PMR) 4.50%

::: Upcoming Economic Reports (6/15/2009- 6/19/2009) :::

Monday:        NY Empire Manufacturing
Tuesday:       Building Permits, Housing Starts, PPI, Capacity Utilization, Industrial Production
Wednesday:  CPI, Crude Inventories
Thursday:      Leading Indicators, Initial Claims, Business Inventories
Friday:           None

::: Earnings I’m Watching This Week :::

Monday: Capstone Turbine (CPST), Casella Waste (CWST)

Tuesday: Best Buy (BBY), Factet Research (FDS)

Wednesday: Fed Ex (FDX)

Thursday: Research In Motion (RIMM)

Filed under Weekly/After Stock Market Review Archives by

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Comments on Nasdaq Flashes The Golden Cross; Coiling The Spring For Another Rally? »

June 21, 2009
(Pingback)

S&P500 and Dow Breaking Down, Nasdaq Remains Strong @ 2:41 pm

[…] whether the rally will continue or enter a prolonged retracement.  Last week, I discussed the developing head and shoulders formations, but it’s much too soon to tell whether those topping formations will confirm.  For now, […]

January 31, 2010

Gina @ 9:12 am

Yes, I was wondering if these stocks that I have are any good. After my mother passed away, I was cleaning out the garage and found a box filled with a lot of shares from early 1900’s (great grandfather), for oil gas and mining companies. Can somebody tell me what to do? I would love to tell my boss I won’t be in this week!(or next week).

I appreciate you immeadiate response
Sincerly,

Gina Seaton