September 26, 2021

Stocks followed through Thursday on the back of Fed Chair Powell's friendly announcement on interest rate policy, then took a breather on Friday to digest its recent gains.

Market participants are wary about inflation being merely a transitory phenomenon, and even the Fed itself left open the possibility of it staying longer than expected. The chart below shows the yield on 10s decisively clearing a six-week ascending triangle.

While one would expect higher bond yields to go hand in hand with strength in cyclical issues, a decent number of cyclical stocks are rolling over. This reflects concerns of an economic slowdown next year.

Within the growth sector, there are virtually no pattern setups for the speculator who seeks entry on five-week-plus base breakouts. A good number of issues are forming three-week shelves. Overall, the market appears to be what one trader said was "mushy," with a certain aimlessness about it below the surface of the averages.

In light of this, the few pullback setups that exist are not believed to offer attractive enough reward-to-risk ratios for our capital.

As discussed in a recent video, the same two cyclical groups which provided the best opps for us in March are again showing the best action. To wit, the oil & gas explorers rose from an 82 RS rank a week ago to 90 on Friday, while the shippers moved from 96 a week ago to Friday's 98. These require more technical work before becoming worthy of our attention.

We have seen plenty of situations when the market did not offer buyable merchandise, only to turn on a dime within a short period of time. Let's keep our minds open to incoming technical data and be ready for whatever the market offers us.

The following names are believed to be the most attractive for our strategy of speculation in the $13+ market.

Denbury (DEN)

Moderna (MRNA)

In summation, there are virtually no pattern setups available to the buyer of base breakouts. A few pullback opps exist, but the overall mushiness of the sub-surface suggests the proper reward-to-risk in these titles is deficient. Patience takes patience.

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