What My Scans Suggest
Looking to the indices, on Thursday, the Nasdaq opened soft
but quickly began to rally. However, it found its high in early trading and dropped back
down to new intra-day lows. It then chopped its way higher for the rest of the
day.
The S&P also put in a somewhat similar performance.
1030 (a), which is the .786 retracement of its recent leg down (b) could provide
resistance here.
So what do we do? My database
continues to generate an overwhelming number of potential shorts vs. longs. As
I’ve said before, this normally indicates that it is a good time to
consider shorts. Therefore, look to nibble on the short side but stick with the
weaker sectors that have pulled back recently (e.g. defense). Also, wait for a
resumption in weakness in the stock and ideally, the market and sector too. Once
again, on the long side, if you played the bounce from the timing
signals (or bought index shares as a hedge against shorts), you might want
to continue to scale out and trail a stop higher.
Looking to potential setups, L-3 Communications
(
LLL |
Quote |
Chart |
News |
PowerRating),
mentioned recently and in the aforementioned weak defense sector, still looks poised to resume its recent meltdown out of a pullback.
And, once again, Northrop Grumman
(
NOC |
Quote |
Chart |
News |
PowerRating), also mentioned recently and also in
the weak defense sector, still looks poised to resume its meltdown out of a
pullback.
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….your book is like an investing bible to me, and I thank you very much for writing in a simple straight forward style that even a novice like me can use….”
Thanks Much,
Cliff A.
