Trail ‘Em
On Friday, the Nasdaq opened firmer but reversed and sold
off for most of the day. It tried to rally in the afternoon but resumed its sell
off going into the close. This action has it closing poorly and at fresh 6-year
lows.
The S&P behaved in a similar manner.
So what do we do? The market is now becoming
oversold. And, you know how I feel about oversold (or overbought) markets. To
those new to the column, if you try to buy an oversold market, oversold will
become more oversold. On the other hand, if you try to short it, it’ll bounce
from oversold. Therefore, probably the best thing to do is to look to
trail stops and take partial profits on existing short positions.
No setups tonight.
Trail ’em
Lately, I have been discussing using a trailing stop on the
Software Holdrs
(
SWH |
Quote |
Chart |
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PowerRating), mentioned recently (see archives). I was discussing using
using either a 1.5 point stop or a 2-bar high. Going into Monday, let’s assume
that we will tighten to 1.5 points (a).
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“A long overdue note to let you know I am re-reading your book for the third time; I have a library
full, but I keep returning to yours, because ultimately its the clarity and relative simplicity that appeals to me; And it has contributed to being more successful in my
trading. I am becoming more convinced every week that its more important to implement a
simple, but sound strategy in an accurate, disciplined way than to stuff my head with hundreds of different
strategies. These strategies might all have merit, but it causes information
overload, and just muddies the water for me; anyway, thanks a lot, keep up the good
column;”
Richard L.
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