A Turning Point and a Trade

8AM EST The rally is starting to feel a little tired at this point. Most of the days this week, the market has tailed off near the end of the day. Some leaders have been showing signs of fatigue. The concern is that we are near the 200 day moving average for most of the major averages and we are getting near overbought areas on most indicators. I would like to see something take us significantly higher but I think we need to pull back before we can really say the major rally is on. I do not think we head to the previous lows, but a 10% correction would be a healthy breather for this furious rally. I would not be surprised to see the market end lower today on some profit taking before the weekend. I would look at it as an opportunity to add to some longs.

The (SPWRA) trade from yesterday is clearly a no go. The action was exactly what I didn't want. We had a strong beginning of the day and a very weak close for the stock. That's why I said in my post from yesterday that I wanted to watch the action before buying. I am definitely staying away. The (RCII) trade from Wednesday is still on and making money. I am currently sitting on about 5% gain and I think we get more.

The trade to look at today is Mylan (MYL). It traded down on huge volume yesterday but with a distinct qualification. The stock didn't end the day on the low which is usually bullish. The other, more important issue about the action yesterday is that (MYL) found significant support at the $12.80 level. It hit $12.80 three separate times in the last 6 weeks and each time it couldn't go lower. With the stock closing at $13.25, you have an easy, low risk trade. Keep a stop slightly below the $12.80 area and keep an eye on the trade. You have about $.45 of downside potential and your first price target would be in the $14.50-$14.75 range. That gives you at 3:1 risk reward ratio. I like the odds. Until next time, stay low risk..