Here’s What The Sectors Are Saying About This Market
On Tuesday, the Nasdaq opened firmer but found its high in
early trading and began to sell off. Then, after trading mostly sideways
throughout mid-day, it resumed its sell off in afternoon trading. This
action has it closing poorly. It also has it stalling short of its old
highs/200-day moving average.
The S&P put in a similar performance.
^next^
As far as sectors, many tech areas (e.g. software, telecom, and Internet)
probed to multi-month highs but reversed to close in the minus column. Biotech
turned back down. It looks poised to continue lower out of a First Thrust.
Outside of tech, retail tried to rally out of its sideways trading range but
failed. The financials finished lower. This action keeps them below multiple
highs and suggests a top remains in place here. Insurance remains in meltdown
mode. In the commodity related stocks, the energies ended slightly lower. They
still look like they have the potential to extend their recent leg down out
of a First Thrust. Metals & mining, especially steel & iron, sold
off hard.
So what do we do? The fact that the market
failed to hold on to its early gains is disappointing. This, combined with poor
sector action and range bound trading in the indices is concerning. Therefore,
you might want to continue to trade at a reduced size. On the short side, if you
took trades in commodity related areas such as energies (e.g. Petroleo Brasileiro
(
PBR |
Quote |
Chart |
News |
PowerRating), mentioned Monday night) and/or metals & mining, make sure you
trail you stop lower. As far as setups, on the short side, the Biotech HOLDRs
(
BBH |
Quote |
Chart |
News |
PowerRating)
look poised to continue lower out of a First Thrust (as usual, email me if you
need the rules).
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
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