More Evidence Of Why You Should Take It One Day At A Time

February 24, 2003
Dave Landry

On Monday, the Nasdaq opened lower
and after chopping
around in early trading, generally worked its way lower throughout the day. This
action has it closing poorly and appears to put an end to its recent relative out
performance.

The February lows, circa 1260, remain a potential target to
the downside.

The S&P also sold off to close poorly. This action
suggests that it is resuming its downtrend out of a pullback from lows.
The February lows (circa 805) are a possible downside target here too.

The top of its
recent trading range/bottom of its topping formation (circa 870)/50-day moving average
could provide resistance.

So what do we do? Monday’s action exemplifies why on
Friday I preached to take it one day at a time. We remain in a bear market. We
remain in an event-driven environment. And, at the risk of
boring you to death, there remain numerous sectors that are in strong downtrends.
These include (but not limited to!) defense, retail, broker/dealer (and other financial), utilities, transports, banks and
telecom. I would imagine by now that most of you are fairly short. Therefore,
focus mostly on managing existing positions–trail stops and look to take
profits.

As you know, in general, I like trading in the direction of
the underlying sector. However, on some occasions, as discussed in
my video,
transitional patterns such as First Thrusts can often lead the sector. With that
said, Possis Medical
(
POSS |
Quote |
Chart |
News |
PowerRating), in the relatively strong medical
appliances & equipment sub-sector (a), looks like it has the potential
to resume its meltdown out of a First Thrust.