Wait For The Next Pitch
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
markets opening. Therefore, overnight events may alter the
outcome of these observations.
On Friday, the Nasdaq was lacking in action–a narrow
range/choppy day.
Once again, the fact that the Nasdaq was unable to clear the top of its
recent range is somewhat concerning.
The S&P didn’t do a whole
lot either.
The Vix is getting stretched do
the downside. This action is triggering CVR sell signals on the Market
Bias Page.
The three-day average TRIN
readings hit 30-day (plus) lows on Friday. This suggests we could get a TRIN Reversal sell signal soon. Further, I’m showing the market as overbought based on
high CHADTP and McClellan Oscillator readings.
One last point, commodities
don’t matter until they matter. Gold, which has been pretty much all but ignored
for years, spiked higher over the last few days. Maybe this means something and
maybe it doesn’t, but you can’t completely ignore it.
So what do we do? Based on the fact that the Naz failed to
break through combined with lackluster trading in the S&P and the
aforementioned overbought indictors, it looks like we’re in for a pull
back.
No setups tonight. Manage what you’re already in and wait
for the market to set up again.
Walk Through (cont.)
When we left off on Thursday (see archive), we were
discussing where potential entries, protective stops, partial profit taking, and
trailing stops could have been applied to RF Micro Devices
(
RFMD |
Quote |
Chart |
News |
PowerRating), a stock
mentioned recently. Today, the stock climbed higher but once again failed to
take out its recent highs decisively. However, it really hasn’t done anything
wrong–yet. Therefore, the trailing stop will remain at the level suggested
yesterday (a). This is also a two-bar low. And, unless the stock makes a
parabolic move higher, we will continue to trail this stop higher using a
two-bar low trailing stop. For general guidelines on how to enter and
manage positions, see my articles on Money
Management under Trader’s Lessons.
Other
There’s a lot more to trading
than just finding setups. You have to consider market action, sector action and
bigger-picture technical patterns within the stocks themselves. For more
information on this, see my latest article Beyond
The Setup. Shoot me an email an let me know what you think.
Best
of luck with your trading on Monday!
P.S. Reminder:
Protective stops on every trade!
“…Recently
I made a smart decision and purchased your book. I was encouraged and
learned a great deal…..The most important chapter to me was how you prepare to
trade. The right mindset is as important as finding the setup…..[I’m in
the trading business with] A good friend of mine……. We are both relatively
youthful at 25 and have soaked your book into our daily routines. I thank
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Thanks again.
John
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