Shorters’ Paradise?
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
Wednesday, the Nasdaq gapped higher (a) and quickly found its high. It then
chopped back and forth for the remainder of the day.
My gut says that something
is keeping a lid on this market. Maybe it’s the fact the Nasdaq failed to take
out its prior high, the fact that the bond market is acting suspiciously or it might
just be the fact that my six-year old analysts keep drawing all those big down
arrows on the charts.
The VIX continued to drop. This
creates a CVR III sell signal. As you know, this doesn’t mean that the market
will turn right away, rather it’s a “get ready.”
So what do we do? Wednesday’s rally sets up even more
shorts. If this is “the” bottom then all these wonderful setups won’t
work. If it’s not, this could be sweet! Play the short side but, as always, wait
for entries.
Looking to potential setups,
JDS
Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating), mentioned recently, appears to be resuming its downtrend.
Tellabs
(
TLAB |
Quote |
Chart |
News |
PowerRating), mentioned
recently, still looks vulnerable.
Charles Schwab
(
SCH |
Quote |
Chart |
News |
PowerRating), mentioned Tuesday night and in the weak broker/dealer sector
(
$XBD.X |
Quote |
Chart |
News |
PowerRating) (see Wednesday’s Option Outlook), still looks vulnerable.
The Broadband Holders
(
BDH |
Quote |
Chart |
News |
PowerRating), mentioned Tuesday night
and on the Pullbacks
Off Lows List, appears to be resuming its downtrend.
Random Thoughts
It amazes me that an analyst is
held in highest regard for reducing her allocation from 70% stocks to 65%
stocks right around the time this bear got started. I guess everyone is so
thankful that 5% of their money didn’t get whacked like the remaining 65%
they left in. Forget about these guys and gals. Be your own analyst.
I have some other thoughts
about this subject but I’ll leave that to the G-man. I’m sure he’ll rip her a
new one in his commentary.
Other
Regarding last night’s
commentary:
“Dave,
you may be a trend-following moron, but you’re our trend-following moron, and we
love you for it……Your columns and book–and all that you and the other guys
offer on TradingMarkets.com–have been such an eye-opening Godsend….”
Annette
D.
Thanks for the kind words
Annette.
Best
of luck with your trading on Thursday!
P.S. Reminder:
Protective stops on every trade!
“..After one spends years sifting through the clutter of indicators, software and complex methods it always amazes me that simple methods applied in a conceptually correct way are the money makers….”
Dave S.
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