Welcome again to my weekly market update. In this weekly editorial piece I’ll update you on my current thinking on the stock market, share some stock ideas and occasionally dig into other markets as well.
Today I’ve got a few thoughts on the stock market and a couple individual investment ideas that may be of interest.
As for the stock market … it continues to show constructive behavior following the late summer swoon.
I showed the following chart last week … and I’ve updated it this week. It shows the percentage of stocks that have bullish patterns per my Stock State Indicator system (SSI) for both the NASDAQ 100 and the S&P 100. (If you want to review how the chart was built you can do so here.)
Bottom line … the number of stocks that are showing bullish patterns continues to increase in both of these major indices. That’s a healthy sign for the broad stock market. Both of the indices in this chart have triggered their own Re-Entry Rules.
More broadly, the NASDAQ Composite has also triggered a Re-Entry Rule but the S&P 500 has not quite triggered its own Re-Entry Rule.
All in all, not a whole lot new to report this week other than a modest uptick in bullishness.
Each week I also like to share with you one or two individual stocks that are showing bullish behavior according to my premium indicators. Not only does it give you some ideas to explore but it also hopefully helps you to understand how I intended the indicators in TradeStops to be used (and how I use them myself).
This week I’ve got two charts for you Eli Lilly (LLY) the healthcare company and Mondelez (MDLZ) the consumer goods company.
I chose these charts this week because I believe that they are strong candidates to soon break out to new highs. Both stocks recently dipped into their Low Risk Zones and bounced right back out. Both have good support from their Smart Moving Averages.
Take a look:
As I’ve matured as an investor, I’ve come to believe that it’s a lot more fun and profitable to invest in strong stocks that are about to get even stronger than it is to try to catch the falling knives. LLY and MDLZ are great examples of strong stocks that could get soon get even stronger.
I hope that you’re all settling into and enjoying the holiday spirit.
Richard M. Smith, PhD