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Favoring Barbell Strategy Using Growth and Cyclical Stocks

May 8, 2020
Favoring Barbell Strategy Using Growth and Cyclical Stocks

It’s not surprising traders and investors are hesitant to put new capital into the equity market given the recent strong rebound that has, for example, just pushed the Nasdaq back into positive territory for the year. For more see page 1. Sure, many growth stocks are reaching well advanced levels, at least in the short-term, but I don’t see a lot of technical evidence yet that the uptrends are reversing.

What levels should you watch for signs that the rally is either extending or beginning to stall? The Standard & Poor’s 500 index (SPX) itself is at an interesting crossroad heading into next week, with last week’s highs at 2954. The 62% retracement level (from the low) between 2934 and 3002, the declining 200-dma, is an important resistance band that will need to be surpassed to keep the uptrend intact.

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