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Disk Drive Index leads sector gainers!

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Yesterday at 11:30 EST we talked about the 10-year Note YIELD (TNX.X), General Motors (NYSE:GM) and even some technology stocks as represented by the Disk Drive Index (DDX.X). Are subscribers watching what some of these indexes and stocks are doing today? If you're not making some money to the upside this morning, we need to begin taking some notes and trying to build some confidence on how many of the things we talk about on a daily basis all interact.

General Motors Chart - 60-minute interval.

Even day traders or short-term traders should keep an open mind with stocks like General Motors (NYSE:GM). One might say that GM is a bit more "predictable" as to how it trades when compared to a more volatile technology stock. The stock still has short-term peaks and valleys, but they don't happen every 60-minutes!

Disk Drive Index Chart - 60-minute interval.

Traders that like a little more "action" like the technology stocks. The key for "bullish traders" is to try and focus on groups that are stronger than others. Often times these are the groups that lead when you get a strong market, even if it only lasts a day or two. Yesterday at the $98.02 level we talked about the DDX.X and the favorable risk/reward profile it offered for technology traders. We'd expect some consolidation near-term at the 50% retracement level, just as we thought there would be support at the 38.2% retracement level. The big question now for those long is, "can this index break 105, then 108 and perhaps 113?" I don't need the answer if I'm moving my stop up to a profitable level at 101. What about some stocks in this group? Are there any that looked favorable for a trade this morning. What about tomorrow morning or later today if the rally builds? Last night on IndexSkybox.com, we set up a bullish trade in shares of Read-Rite (NASDAQ:RDRT) if the stock broke above $9.63.

Jeff Bailey
Staff Analyst

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