A Good Setup For A Bad Market
Looking to the indices, on Tuesday, the Nasdaq opened soft
but quickly found its low and began to rally. However, it was unable to hold on
to its gains and then traded back and forth for the remainder of the day.
The S&P also traded back and forth and was also unable
to finish in the plus column.
So what do we do? Notice above that the S&P
has essentially gone nowhere in the last 7 weeks or so. As you can see,
momentum, a key component in momentum trading, is missing. Therefore, until we
get a meaningful breakout or breakdown, I don’t think there’s too much to do. If
you must trade, make sure you stick with selected areas of stronger sectors such
as health services, leisure, financial, telecom, and
insurance. If you’re anxious to get short, remain patient, we could seen numerous
technology stocks setting up soon.
Looking to potential setups, Caremark RX*
(
CMX |
Quote |
Chart |
News |
PowerRating), in the
strong health services sub-sector, looks like it has the potential to resume its
accelerating uptrend out of a pullback.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is being released on Friday, February 28.
Click here for details.
*Since CMX will be the parent company of ADVP, I’m swapping out this
stock for ADVP (see last night’s column).