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Louise Yamada: S&P 500 Groping for Support, New Leaders Emerging

Jeffrey Macke
Fin - Breakout - US

Legendary technical analyst Louise Yamada graced the Breakout set to give us her take on the tape's field position in the wake of recently volatile trading.

Louise sees the S&P 500 as resting almost precisely on intermediate support at the 1,300 level, offering bulls a chance to get long provided they keep a tight selling stop below. She characterized the market as lacking sector breadth, with industrials and energy names leading the way along with small and mid-caps. On the dark side, sectors such as financials and consumer discretionary have lagged and will continue to do so, in Louise's view.

The two-year rally has been a secular correction within a bear market, not yet the start of a new bull market, she says.

She is turning bullish on technology, but with a catch. "I'm not (bullish on) names like Microsoft (MSFT), Cisco (CSCO) and Intel (INTC) , which have lagged and will continue to lag," she says. Instead, she suggests some of the companies more under the radar, noting that many tech stocks have been working off their bubble excesses for as long as a decade. (In the next clip, she offers several specific picks.)

Overall Ms. Yamada sees the environment as one for trading, not long-term positioning. That means buying dips and taking gains, or losses, if the tide turns against your position.

Louise Yamada has made me money both at my hedge fund and in my personal trading. Equally important, she's helped me keep those gains with her strict rules for when to sell. Whatever your core discipline, you ignore charts at your own peril. Be sure to watch both this clip and the ones which will be posted throughout the day.