The Dow Jones Composite Mirrors Dow Theory
We are anticipating the Dow Jones Composite will continue higher this week, as transports and industrials outperform. Breadth is improving across several measures, that we follow. Additionally, new highs are signaling a return to a bullish trend, as the indices break to fresh all time highs. That said, we expect a respite soon.
The NYSE is perched atop a triangle pattern, signaling a potential break above Volume by Price (VBP) resistance. More important is the indicator in the bottom panel, which suggests a return to a bullish trend in breadth, as new highs continue to expand.
New Highs minus New Lows or the NYHL, is expanding as well. Note the moving average did not dip below the zero line and instead turned higher last week, as we reversed from the Wednesday sell off in the prior week. Until we see a dip below the zero line, there is no sell signal. Anticipate consolidation of the current 6 day bounce and note all six days produced green Elder bars. Until we see a blue bar, the trend is intact.
Semiconductors had a strong week. Stocks on the watch list, like MTSI are no exception. We will look to these names for bullish TD setups using the 5 minute time frame for entry and exit (stops).
For a primer on the Trade of the Day Setup (TD), please watch this short video for an explanation that will help new members.
Watch List for the Week
Below are a few stocks we are watching this week. Note the additional candidates at the bottom as well. Many of these look good, though I did not research them thoroughly.
These winning stock picks will likely follow through on their bullish trends, so we would recommend using the TD setup to monitor them.