What These Three Indices Are Telling Us
On Tuesday, the Nasdaq worked its way lower in a choppy
fashion.
This action has it hitting new lows for the calendar year,
it keeps it well below its 50-day moving average, and it keeps it below overhead resistance.
The S&P, put in a similar performance.
This action keeps it in a trading range and has it tagging
its 50-day moving average.
The action in the Dow is also noteworthy. It broke down
below its recent lows. This action creates a level of overhead resistance.
So what do we do? As implied above, the
performance in the indices remains poor. The Nasdaq and Dow appear to be
breaking down. Further, the S&P remains stuck in a trading range and below
multiple tops. In such an environment, one would think that there would be
plethora of shorts setting up. However, most stocks have traded in a choppy
range (like the indices themselves). Said alternatively, there aren’t very
many “clean” setups. I would imagine if the indices continue to slide,
we should see better shorts setting up (on the next bounce/pullback). For now,
sitting on your hands probably remains the best course of action. If you do
trade, stick with stronger sectors that have recently corrected such as selected
health services (e.g. HMOs).
No setups tonight.
Happy Birthday Isabelle!
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
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