A Valuable Lesson
Smoke ’em If You Got ’em
Photon Dynamics
(
PHTN |
Quote |
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News |
PowerRating), mentioned recently as a short,
has had a nice swing move lower since then (a). When you get a quick profit like
this, make sure you lock in half and move your stop to breakeven on the rest.
This way, barring overnight gaps, you have a “free” trade that has the
potential to turn into a homerun. Â
Looking to the indices, on Wednesday, the Nasdaq gapped
lower but then essentially traded mostly sideways for much of the day. However,
the selling resumed in early afternoon trading. This action has it closing
poorly and right at its 50-day moving average.Â
The S&P finished lower but held up much better.
Hopefully, (did I say hope? oops!) its recent lows (1120) will hold.Â
So what do we do?  After a day like
Wednesday, it now makes sense why my database kept turning up all these shorts
in spite of an overall up market. This recent “stealth” selling left
clues behind and is why I look at so many charts nightly (and so should you). It
also shows that even in an “obvious” up market, you should keep an eye
out for shorts. Now keep in mind that I’m not trying to cover up the fact
that I was wrong on the overall market direction lately. My point is that there
is a lesson in this. If you are seeing a lot of shorts setting up in a strong
market, the charts might be trying to tell you something. Maybe I wasn’t
listening hard enough. Â
Looking to potential setups, Alcoa
(
AA |
Quote |
Chart |
News |
PowerRating), mentioned
Tuesday night and in the weak metals & mining–aluminum sub-sector, still looks poised to continue its rollover out of
a pullback/inverted cup and handle
formation.
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S.
This weekend I’m having a small, exclusive three-day swing trading seminar and I would like you to attend.
Click
here.