Back To The Blue Arrows
On Wednesday, the Nasdaq opened flat and began to sell off.
It then worked its way higher for most of the morning. However, it found its
high early in the afternoon and began to sell off. This selling accelerated
going into the close. This action has it closing poorly and suggests we will
return to last week’s (which are also multi-year) lows.
The S&P put in a similar performance.
The Dow (and the Diamonds
(
DIA |
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PowerRating)) are now set up as a
pullback from lows.
So what do we do? The fact that we turned back down
so soon suggests that the big blue arrows remain valid. Therefore, look for
shorting opportunities once again.
Looking to potential setups, the insurance stocks look
poised to continue their downtrend out of a pullback from lows. With that said,
Hartford Financial Services
(
HIG |
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PowerRating) is setting up as a pullback from lows.
The semis also look poised to resume their downtrend out of
a pullback from lows. Look for shorting opportunities in Varian Semiconductor
(
VSEA |
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PowerRating),
mentioned recently and the Semiconductor Holders
(
SMH |
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News |
PowerRating).
Oops, Did I Say Billion?
After the close, it was reported that Bear Stearns erroneously
entered an order late in the day to sell billions of S&P futures. The order
was supposed to be millions (I can’t wait to see what smart comment Joe Corona
will have about this!). This would explain the acceleration of the sell off
going into the close. In spite of this “explanation,” I’m sticking
with what the charts are telling me from a technical standpoint.
Trail ’em If You Get ’em
When I last left off, I was discussing trailing a stop on
the Software Holdrs
(
SWH |
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PowerRating), mentioned recently. I was discussing using
the lesser of a 2-bar
high or 1.5 points. This placed the stop above Friday’s high. For
Thursday, (once again) let’s assume there are no adjustments to this stop
(a).
Now Lili
Well, once again, the potential exists that I might be out
of commission due to a storm. And, this one looks like the real deal. So far,
the forecast akes it west of here. However, I offered my office as a hurricane
shelter to my friends and extended family (who are in the path). So, it might be difficult
to work anyway. Should I be out, don’t do anything stupid without me. And,
should I
get blown away, here is some helpful advice:
protective stops on every trade, trade in the direction of
the big blue arrows, your results may vary, close box before striking, objects
in mirror are closer than they appear, in case of rash-discontinue use, light
fuse and get away, do not drive or operate heavy machinery while on this
medication, for children under 12-consult a physician.
Best of luck with
your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“Feel free to quote me, the book is fantastic. It is written for traders who want to know the real basis of
successful trading. No glory stuff. No hero tales. Plain old sound advice which is a rare commodity in this
business”.
Mike Marlow
No risk,
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