I’ll confess that last week I was a little gloomy. However, like all good equivocators, I noted my bearishness would only come out if support on the Dow was violated. Well, at least my eye for trend lines was good, as the Dow bounced exactly where I noted, and had a pretty nice run. Below you can see last week’s chart with this week’s update.
Of course, the straight up move makes the average fairly overbought, so I’m not sure I’d be a buyer right now. (In fact, in my own accounts, I’ve been selling into the rally.)
Unfortunately, the Nasdaq doesn’t look much better. It’s up an even bigger percentage, and my feeling is it’s ripe for another pullback.
Speaking of pullbacks, momentum favorite Netflix (NASDAQ:NFLX) sure had a rough week. The question is, was it rough enough to warrant a purchase? Frankly, I thought about it for myself as our family uses the online feature quite a bit. And I do love stocks we use and have pulled back at least 10%.
Still, in looking at the chart below, I think the pullback could go on for a bit. In fact, on a long term chart, I don’t see any support until almost 100 points for now. Venture if you must, but come with a long-term persepective!