The major index charts remain in solid rising trends for now. On a fundamental level, I continue to think this rally has been built on TARP money, short covering, and unrealistic hopes on the economy. Although corporate earnings have exceeded estimates, in the end earnings remain poor. Overbought sectors such as retail, restaurants, real estate, and financials need to contend with a still-deteriorating economic picture. That being the case, I am choosing to remain patient with a majority of short positions while actively trading the long side as long as the rally continues.
During the past week, I was finding more charts I like for long trades, considering so many have broken out on earnings. Here a some that I am watching for Monday:
- MXIM: A number of semiconductor companies are looking good. I started a position Friday morning, and will look to hold with a stop below the 50 day moving average.
- TBSI: The shippers are getting a lot of attention from traders. TBSI is among the less extended charts, and has good volume coming out of its base.
- SQM: If this rally continues, more money will need to flow into commodity stocks. SQM has a clean rising trend, with the 50 and 200 day moving averages also serving as support.
