December 26, 2021

Seeing as how our last report was only one trading day ago, not much has changed. The Nasdaq continues to respond positively as uncertainty surrounding the Omicron variant lifts.

Technically, the Nasdaq's Wyckoff spring pattern of last Monday produced a straight-up rally to above the 50 ma. The trend is now up despite the Nasdaq putting in a higher pivot high but not a higher pivot low. While in theory this would be considered a neutral trend, we believe in simplification whenever possible.

Along these lines, over the years I have found that the 20 ema is a superb descriptor of the short-term trend, and the only one necessary, no matter what market or timeframe is used.

We do not base our market timing on the O'Neil follow-through day. For those who do, the recent FTD failed last Monday as price undercut the early-December low.

This is not our type of market. Growth stock leadership remains nearly non-existent. Market participants still favor value/cyclical issues, as evidenced by the Nasdaq lagging RS line for the past five weeks.

The best thing that could happen to growth stocks would be an economic slowdown, which could ease inflationary pressure and allow the Fed to take their foot off the brake pedal. At that point, the market would once again place a premium on recession-resistant earnings growth, which is what growth stocks are all about.

However, let's be careful what we wish for. This scenario, if it happened, would raise the specter of deflation, which is more dangerous than inflation, and by factors.

Otherwise, breakouts in growth are still unusual. For the time being, the game plan is to maintain a generous cash position. This is far from being a back-up-the-truck market.

The following names are 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 breakouts have not proven themselves in this market.

Arcbest (ARCB)

Fortinet (FTNT) 

Part II of this report is in video format (8:42) and may be viewed by clicking here.

In summation, this is a seasonally friendly time of year for the market historically, and continued markups this week would not be a surprise. With virtually nothing in the way of pattern setups, a full cash position is appropriate for most speculators.

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)