Interpreting the Market

We’re continuing our weekly interpreting the market analysis with a look at the NASDAQ, which is up 12 out of 13 sessions. We are beginning to see the signs of an overall market character change; growth stocks are starting to work and are holding their breakouts.

The great part about being an individual investor—or even a small hedge fund—is that we trade nimbly with the market, as compared to a large long-only mutual fund. Our trading decisions do not have to be all-or-none. If one decision is supported by the market, we can continue to add to or hold the position until the market signals otherwise.

A current example would be the NASDAQ’s recent highs. If the market is trending above recent highs, we should continue to stay in a risk-on long environment. However, if the market doesn’t trend higher, we should act accordingly by managing risk through our positions. If the market starts to deteriorate, we would want to scale back positions.

The next logical step is to gauge whether or not current leading stocks can hold their breakouts and if other stocks can continue to breakout on good earnings. Again, this would result in a continued risk-on environment and should give investors confidence in the current market.

As always, if you have any questions please call the MarketSmith Team at (800)-424-9033 or email us at

Happy hunting,
The MarketSmith Team