What The Wolf Said
On Friday, the Nasdaq gapped open and continued higher for
most of the day. It gave back some late in the day but still managed to close
well.
The S&P also put in a solid day.
After such an impressive two-day rally, I think a little perspective
is in order. Here is the weekly Nasdaq going back to 1999.
And, here is the weekly S&P.
So what do we do? As “The Wolf” said in
Pulp Fiction: “Let’s not start kissing each other just yet.”* When you
take a step back and look at the bigger picture (e.g., above), it sure looks like
we remain in a longer-term downtrend. Could this be “THE” bottom? Sure, but I don’t know and I don’t care. I’m not one of those geniuses** who
calls a bottom every few weeks for the sake of being “right” when it
finally does occur. For now, let’s just take it one step at a time. And so
far, it looks like we are just pulling back in the longer-term downtrend. If
this does turn into something bigger (we have had a few tradable rallies in this
nasty bear market) we will have plenty of time to get long on transitional/first
pullback type setups (e.g., Bow Ties, First Thrusts etc…).
Therefore, for now, continue to put together your watch list of
stocks in the weakest sectors such as banks and utilities.
Looking to potential setups, Borg Warner Automotive
(
BWA |
Quote |
Chart |
News |
PowerRating),
mentioned Thursday, could set up as a pullback soon.
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*At least that’s what I remember him saying.
**To those new to this column, my critics call me a “Trend Following
Moronâ€â€”