Lately the Dow and the S&P have been falling down rapidly but if you look at the NASDAQ you will see a different story..
Above is a line chart of the NASDAQ and the S&P. I don't usually use line charts (which are based on closing prices) but I wanted to show how the S&P got down to the close from last August. If I had used a bar chart you wouldn't have noticed this because of the spike low on that particular day in August.
Notice how the S&P tested the low from last summer while the NASDAQ is way above last summer's low. In my opinion this tells me that the NASDAQ is much stronger than the S&P and even the DOW (not shown). If you've been a reader of my blog for any length of time, you would know I always look to position myself in the strongest stocks and indices/groups. I never buy the laggards with the hopes that it will play catch up.
I'll be watching the NASDAQ in the days to come for a possible buying opportunity. If I do anything I will post it here the day I buy the Q's or short the QID's. Right now I'm just going to be patient and let the market do what it is going to do. If the NASDAQ breaks down from here, I will do nothing, but if I see the NASDAQ begin to rally a little bit more, I'll be all over it. I'm looking to buy strength not weakness. We'll see what happens.
Tuesday, November 27, 2007
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