December 22, 2021

Ebbing concerns over the severity of the Omicron variant boosted stocks this week, allowing the Nasdaq to climb back above the 20 ema.

The Nasdaq's action was spurred by a classic example of the Wyckoff spring pattern, whereby price undercut a prior swing low and then finished the day back above that low.

NYSE breadth was better than the S&P's progress on all three days this week. Ditto for the Nasdaq, excepting today's activity.

Nothing has changed much beneath the hood of the major averages. Institutions are not interested in a risk-on posture. This means few technology titles moved much over the past few days, let alone wheeled into position for takeoff.

Value and defensive issues remain popular at the expense of the growth sector.

Some people become excited at buying former leaders that are 30%-40% or more off their highs. As we learned from Bill O'Neil, the better solution is to buy closer to their 52-week high in order to avoid buying into resistance. Resistance acts as friction on a stock moving higher. Too, there is no evidence that a stock 30% off its high will again become a leader.

While we would be interested in cyclical stocks potentially, none are well-positioned at this time.

The following stock is believed to be the most attractive for our strategy of speculation in the $13+ market. This is for those subscribers who would like long exposure even though the Nasdaq is technically still in a down trend, with lower highs and lower lows.

Fortinet (FTNT)

Part II of this report is in video format (7:13) and may be viewed by clicking here.

In summation, the market remains in risk-off mode. The backdrop - higher inflation and interest rates - hasn't changed. Virtually nothing sets up for our strategy of speculation. Let's sit in cash and protect precious capital until it does.

Kevin Marder

Trading Lessons
Introduction to the service video (38:00)
Money management and risk management video (20:27)
Bread and butter pullback video (11:10)
Bread and butter pullback: Pt II video (15:09)
Bread and butter pullback: Pt III video (31:48)
Bread and butter pullback: Pt IV video (30:16)
System R
Short-selling video (25:53)