THE MORE WE DRIFT, THE MORE LIKELY WE CLIMB

The more the markets drift sideways, the more likely they will move higher. I'm talking probabilities not absolutes. You have heard me talk about "volcano" tops and how rare they are. Most tops are formed with a quick, definitive reversal. Usually when the market (or an individual stock) starts to move sideways, it will usually continue in the direction of the previous trend. This doesn't mean that the market couldn't sell off a bit more in the next few days. If it does, it would likely present a great buying opportunity...provided the selling isn't a 300 point drop with a huge spike in the VIX. Some of the stocks that I recommended a few days ago have started to resume their uptrends. Some are still correcting a bit. There has been some selling in the energy sector over the last few days. This is expected. Many of these stocks broke out to new highs...which is why they were recommended. After a stock breaks out to a new high, it will often move sideways a bit or pull back a bit before resuming the trend. If these stocks start to break below their 50 day MA's, we'll know that there could be a sector rotation underway. I liked the move on CHK today. Lately, the volume on the up days has been higher than the volume on the down days. This is often a bullish sign. I really like the consolidation over the last month. I also like how it closed today at the high of the day. We'll see if this one makes an explosive move soon. I still like the GLD and SLV trades. Have a good weekend.