Hey Gang,
What a day in the market! Some key issues were resolved today fundamentally.
- Goldman Sachs earnings didn’t indicate company failure
- Best Buy reported better than expected earnings…giving hope that Christmas will come to retail.
- Fed stepped up and showed a commitment to continue its monetary easing policies.
With that being said, from a technical standpoint, many stocks and even the market were sitting on their 50-day moving average. The positive news in the market today gave the bulls the needed catalyst to take back control of the 50 and move above it.
One of the keys with the capture of any moving average is volume. Big volume on the day of the surge above the 50-day MA is nice, but a volume indicator such as the OBV(on balance volume) can asssist in seeing whether the volume trend is bullish or bearish. When the OBV pushes above its own 50-day MA, it shows that the bulls are controlling, not only the price action, but the trading volume. These 2 factors are key in determining if a break of a moving average is legit.
The following charts show that not only have the bulls captured the price action by moving above the 50-day MA, but they have taken control of the volume. Buying on breakouts is a fun strategy. Waiting for pullbacks is also exceptable…but…becareful on any short plays. The bears are losing their bite for the short term.
Happy Trades!
Jeff
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