As we have been suggesting the recent stock market consolidation has been constructive enough that we have reframed from calling it a correction. One reason for our thesis is the Semiconductor Index (SOX) has remained strong and outperformed the broader market during the consolidation phase. Good economic data today propelled stocks significantly higher. Breadth showed strength but the one missing ingredient from today's action was strong volume. However, we are increasing the support/resistance levels for the DJIA (DIA), S&P 500 (SPY), and Nasdaq Composite (QQQQ) (see below). In contrast to yesterday's session investor fears as measured through the Volatility Index (VIX) eased and if this continues could signal further upside action for stocks. We are adding Cisco (symbol: CSCO) to our watch list at tomorrow's market open price. Overall, the prudent approach based on the current stock market direction indicates it is ok to own small positions in stocks. As always, protect your profits and keep your losing positions from becoming big losses.
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