The price action in the stock market was quite positive on Friday, considering the bad news regarding the auto bail-out and some weak economic data. Stocks still managed to close higher on Friday, with the Russell 2000 leading the major averages with a better than 3% gain. What we would now like to see is an upside breakout above 1603 on the Nasdaq, 919 on the S&P 500 and 492 on the Russell 2000. These levels represent 4 week highs in the averages.
It was interesting to note that the top five performing industry groups on Friday were REITS, as many of these groups surged at least 10% on Friday. Whether this was a reflection of lowering mortgage rates is yet to be determined. It still does not appear that big banks are willing to lend any money.
Other top performing groups were the casinos, office supplies, semiconductors, and airlines, among others.
For Monday, due to the improved tone in the market, consider an opening range breakout strategy to the long side in an Exchange Traded Fund that tracks the Nasdaq or the Russell 2000. QLD and IWM come to mind.
Scott Cole
www.bestdaytradingstocks.com
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