Why I Remain Bullish But Think You Should Take Some Profits
On Wednesday, the Nasdaq opened firmer but found its
morning high fairly quickly and began to sell off. It turned back up in early
trading and rallied to new highs by mid-day. It then sold off throughout most of the
day but did firm enough to finish in the plus column. This action was enough to
put it at new highs for the year.Â
The S&P put in a similar performance.
So what do we do? There was a lot of media celebrating on
Wednesday. This is normally the “kiss of death”–a sign that we could
be in for some corrective action. Looking to more objective analysis, the market
is overbought (and stalling a bit) based on price action and shorter-term
average advance decline readings. Further, there is a “just miss”
(less than 30-day) TRIN Reversal sell signal. Don’t get me wrong. The trend
remains up and overbought can always become more overbought. However, in light
of these signs, it might be a good time to take some profits and trail a stop
higher on existing longs. For the aggressive, you might look to nibble on the
short side in the index shares for either outright speculation (on signs of a
reversal) or as a hedge against long positions.
No setups tonight. Once again, we should see numerous setups on
the next pullback.
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….. thanks for writing your simple,
informative, and easy to understand swing trade book. It was very helpful to me in many ways…..
Larry S.
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