Here’s Why You Should Exercise Caution

Looking to the indices, on Friday, the Nasdaq opened
firmer on a positive jobs report but quickly found its high. It then chopped
back and forth for most of the day. Finally, it sold off going into the close.
This action has it closing poorly.

The S&P put in a somewhat similar performance.

So what do we do? The fact that the indices
couldn’t rally on a blow-out jobs report suggests that we could be in for some
corrective action. Therefore, wait to see if the indices can breakout to new
highs decisively and stick before getting too excited on the long side. In the
meantime, continue to focus on those issues such as the metals that can trade
contra to the indices. On the short side, you might consider a contra-trend
trade in the index shares, especially if you are looking to hedge existing
longs.

No setups tonight. If we begin to sell off in earnest we
will likely see transitional setups. Conversely, if the indices break out and
then have an orderly pullback, we will see many trend resumption patterns
setting up.

Best of luck with your trading on Monday!

Dave Landry

dave@davelandry.com

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

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