2% Is Not Worth The Risk
On Monday, the Nasdaq rallied in early trading, consolidated throughout mid-day,
and then rallied in early afternoon trading. However, it found its high late in
the day and sold off.Â
It remains below its 50-day moving average.Â
The S&P’s put in a similar performance.
So what do we do? The fact that the market
(especially the Nasdaq) gave back much of its gains late in the day is not
encouraging. In the sectors, many still look like tops. Even if they did rally,
they would have a tremendous amount of overhead resistance to plow through.
Therefore, on the long side, I think a “show me” attitude remains
prudent–wait for the market to prove itself by making new highs. So what if you
miss that 2%. If the bull market truly resumes, it should go much more
than 2%? Right? On the short side, continue to watch for transitional patterns (i.e. early
trend) in (but not limited to)Â Defense, chemicals, Internet, software,
REITS, mortgage related, financials, and retail. Â
As far as setups, CIT Group
(
CIT |
Quote |
Chart |
News |
PowerRating), in the weak credit
sector (and let’s face it, what good is weak credit?), looks poised to resume
its slide out of a First Thrust/Reversal Gap (as usual, email me if you need
rules to the patterns).
Lockheed Martin
(
LMT |
Quote |
Chart |
News |
PowerRating), mentioned recently as a
potential short, still looks like it has potential.Â
Best of luck with your trading on Monday!Â
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
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