3/26 CHARTIST HOTLINE
Monday, March 26, 2018
The market posted its biggest gain since late August of 2015. The Nasdaq +227 points (+3.3%) led the way while the Dow picked up 669 points +2.8%. However, it was not a one way street. Between 9:40 and 11:20 East Coast Time, the market gave back a good portion of its earlier gains. From that point, it worked its way progressively higher into the close with all of the widely followed indices finishing the session at their highs of the day or just a tick away. Today’s rally was worldwide with China in the forefront. All of the International ETFs that we track, with the exception of Russia, were sharply higher.
For the time being, the key indices have successfully tested support. A snap back rally was certainly overdue with our overbought/oversold indicator in a heavily oversold condition on Friday at -3.41. When it hits -3.00 or more, it often marks a turning point, sometimes right to the day or within the next two to three trading sessions. As an example, the previous heavily overbought reading was on February 5th. The bottom was reached three days later. Going back still further, the previous heavily overbought reading on 6/27/16 marked the exact bottom of the pullback that was in effect at that time. The S&P 500 had lost over 5% over the previous two trading sessions.
The Actual Cash Account gained $30,346 (+2.39%) in today’s session. In the Trader’s Portfolio there were 27 winners and one loser. Adobe Systems +6.5% and Lam Research +6% led on the upside. On the downside, Shopify -3.1%. None of the stocks in the Trader’s Portfolio closed below their mental stops.
Whether we have turned the corner, given today’s sharp rally, remains to be seen, but it is certainly a step in the right direction. Bottom line, our models are positive. We remain in the bullish camp.
