What Concerns Me About This Market
Looking to the indices, on Tuesday, the Nasdaq open soft
but found its low fairly quickly and began to rally. However, it stalled at
Monday’s high and sold off. This action keeps it below the October high. .
The S&P put in a somewhat similar performance. This action
gives back much of Monday’s gains and puts it back below its prior high.
So what do we do? The lack of follow through
around the old highs combined with the overbought nature of the indices is
keeping me concerned. Longer-term, most sectors and many stocks within them,
remain in strong uptrends. However, once again, I don’t think its ever prudent
to buy an overbought market. Therefore, for now, on the long side, manage existing positions (trail stops and
take partial profits). And, stick with issues that can contra to the indices such
as those commodity related stocks in uptrends (e.g. metals & mining). On the short side, you might want to continue to
watch for a contra-trend trade in the indices to help balance out (i.e. hedge)
longs.
No setups tonight.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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