All We Need Is A Trend
On Tuesday, the Nasdaq lapped higher but reversed to sell
off hard for a solid trend day lower.
This action puts the index well below its 50 and 200-day
moving averages takes out the 1900 support level.
The S&P sold off and is now right around its December
lows (circa 1120). Â
So what do we do? Tuesday’s
action suggests that we will see additional downside–either follow though from
this sell off or after the first bounce. Although a bull market would be nice,
as swing traders we really don’t care which way the market goes, provided of
course, it persists. Said another way, we just need a trend, up or down. Wait to see how the
situation develops. If we see additional downside, this should set up
opportunities on the first bounce.Â
Looking to potential setups, 3-M
(
MMM |
Quote |
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News |
PowerRating) looks poised to continue its rollover out of a Bow Tie.
Still On The Trial
When I last left off, I was
showing how a trailing stop could (hopefully) be used to capture an
extraordinary gain. I was using Abgenix
(
ABGX |
Quote |
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PowerRating), a Bow Tie short mentioned
recently, as an example. If you haven’t read the recent archives, now might be a
good time to do so. On Friday, I discussed that the trailing stop was lowered to
just above Friday’s high which also corresponded with a recent high (a). This
level should not be hit if the stock is in a solid downtrend. There is no change
for Wednesday. This only thing that I would point out is if you didn’t already
take partial profits, the thrust lower (b) would have provided another
opportunity to take
them.
Best of luck with
your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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