Leading stocks keep shining
A market correction becomes obvious when leaders start to break down. It is very normal to see stocks of bad companies taking huge hits when the market corrects; good stocks however tend to be more resilient and ultimately they are the ones that can keep an uptrend going. Look at Apple and Goldman Sachs for example. In a very bad tape this week where the S&P closed down 20 points or almost 2%, AAPL managed to log in a gain of $2.50 and GS managed to close pretty much unchanged at +$0.11. These are some of the leaders of this market. When they roll over, everything else follows.
Today’s action was pretty encouraging. We declined on lower volume and we also bounced back from the key support level @ the 50-day moving average. My point is that considering that market leaders are acting well, key technical support levels are holding and selling pressure does not point towards heavy institutional selling, I believe that this uptrend has still legs and it could resume as early as next week.
As always, I can only make a prediction based upon facts, therefore if the market starts behaving differently than what I believe, I shall be the first to change my strategy.
Have a good weekend everyone and best of luck with your trading.