Tips On How To Catch A Market Bottom
I’m David S. Landry, and I approved this column.
No Tickee, No Tradee
Cypress Bioscience
(
CYPB |
Quote |
Chart |
News |
PowerRating), mentioned recently as a
potential long, has imploded since then. Fortunately, the stock did not
trigger(a)–trade above the prior day’s high. As you can see, this simple
technique of waiting for confirmation can often keep you out of a losing trade.
Wait for entries, especially during poor market conditions.
On Friday, the Nasdaq generally worked its way lower
throughout the day. This action has it closing poorly and puts it below the well
watched 200-day moving average.
The S&P generally chopped sideways but sold off going
into the close. This action
also has it closing poorly.
As mentioned recently, the March lows, circa 1080, which also corresponds with its
200-day moving average (when/if it gets there), could be a target to the downside here.
^next^
So what do we do?
Although the continued
selling has the market oversold, I think it could have further to go. Why? So
far, I’m not seeing the panic that one normally associates with a market bottom.
In fact, I’m already hearing a lot of talk about trying to “catch the
low.” If you’re in this camp, I think I’d hold off for now. Wait
until you see signs of everyone “throwing in the towel.” A
sharply lower opening followed by a spike higher in the VIX is normally a good
indication that this is occurring. Then, right when things seem their
worst, look for a trade in the index shares.
No setups tonight. Remain patient. Once again, with so many
sectors making new lows/breaking down, we could see a plethora of shorts setting
up soon (on the first bounce).
Best of luck with your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Now is a good time to get my newest 20-hour CD-ROM course, Dave Landry: The Mentoring Sessions. It’s 20% off for a limited time at TradingMarkets.com. Just
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