Stock Trading: What is Overbought and What has Room to Grow?

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Overall, if this was a correction, not too severe, especially considering how well AAPL AMZN CELG and IBM did-3 leaders. Of course, lots of small tech stocks rallied, but look at what needed to lead and did-SMH, XLK, IBB. And look at what struggled-commodities and financials. Same story. Divergence makes trading tough. The mid August low to early September high trading range in the indexes remains intact. Volume was light with bullish candle and confirmed accumulation day in NASDAQ. GOOG beat earnings big time. The global economy is scary. Midcaps and S & P stocks have to get going as the leaders are getting super long in the tooth. Trade with a plan.

SPY: Closed above S1. September high 123.51. Still more troubling since the slope on the 50 DMA continues to decline. Over 121.20 will be hard to argue with.

DIA: Closed above S1. 117.03 September high. Declining slope on 50 DMA as well. Over 115.23 interesting.

QQQ: 57.35 September high. Never broke S1 or the 200 DMA. Still overbought on the daily RSI. Not the weekly though.

IWM: Closed above S1.  September high 73.39. Above 70.40 interesting under 68.35 not so much.

ETFs:

GLD Now that everyone is snoring, one day this will wake up with a vengeance. Not failing though which probably means next direction up.

XLK (Technology) SMH (Semiconductors) Overbought with no signs of rolling over yet

IBB* (Biotechnology) Inside day after Bearish engulfing candle. Good one to follow the way range breaks.

XLE (Energy) A close over 50 DMA at 64.45 would be interesting. Longer term trend positive: only a weekly close under 62.00 would change that.

OIH (Oil Service Holders) Still lagging behind but held support. The 50 DMA a bit away at 122.50

TLT (The 20 year Treasuries) Filled gap and closed beneath. Although long term trend up intact, today's performance was somewhat disappointing considering how oversold it was.

XRT (Retail) 50.00 still needs to hold. Like IBB, not overbought. Both areas have room if market continues to firm.

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