Use Caution While The Maket Does This

  • May 21, 2004
  • Dave Landry

I’m Dave Landry and I approved this column. 

On Friday, the Nasdaq opened firmer, traded back-and-forth,
and finally, closed just about where it started.  

This action keeps it below minor resistance/its 200-day moving average. 

The S&P rallied in the morning but gave back much of
its gains in the afternoon.

Home On The Range? 

I spoke with several traders today and we all agreed, other
than in a few selected areas such as the energies (e.g. PTEN mentioned
recently), there hasn’t been any follow through lately.  This is pretty
obvious when look at the indices themselves. Notice above that they have been
settling into a choppy range as of late. And, as you know, a sideways or
choppy market is the nemesis of the momentum trader.

So what do we do?  The market still remains in
a downtrend, most sectors remain in downtrend, and most stocks remain in
downtrends. Therefore, continue
to look to play the short side. However, as implied above, you might want
to keep positions light until the market can show more (or any!)
conviction. 

As far as setups, aggressive traders may want to take a
look at Onyx Pharmaceuticals
(
ONXX |
Quote |
Chart |
News |
PowerRating)  in the weak biotech sector. Notice how it has been
in a freefall since making all-time highs. Also notice that it formed a one-bar
pullback on Friday. This action sets up a pattern I call a First Thrust (as
usual, email me if you need rules to this or anything mentioned in this
column). 

Housekeeping

I have been getting quite a few returned emails as of late
(possibly do to anti spam/virus software?). If you
have requested something recently and have not received a reply back from me,
you might want to try again (possibly through an alternate account?). 

Best of luck with your trading on Monday!

Dave Landry

dave@davelandry.com

P.S. Reminder: Protective stops on every trade!

P.P.S. My new 20-hour course is now shipping.
Click here to learn
more, or to order.

*Speaking of
which, just curious, am I the only one who trades in his underwear? Man that
scares the heck out of the UPS guy.

 

 

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