An Old Sermon
On Friday, the Nasdaq opened soft but began to rally.
However, it found its high early and began to drop. Then, after some mid-day
drifting, it resumed its sell off. This action has it closing at new lows for
the year and about 50 points away from last September’s low.
The S&P also sold off hard. This action puts it near
last Friday’s low.
So what do we do? Obviously, the trend remains down.
However, this is the time that I’ll once again give my “damned if you do and
damned if you don’t” oversold speech. If you try to buy, the oversold
condition will become even more oversold. If you short it, then it’ll bounce. As
mentioned Thursday night, probably the best thing to do is to look to
scale out of existing shorts and tighten your stops.
Based on the environment, I am not showing any setups
tonight. If you are nimble, you might look to buy (GASP!) the index shares
should they “pop down” and have an early morning reversal on Monday.
Just don’t overstay your welcome since you are fighting a sharp downtrend.
Walk Through Continued
On Thursday, I was discussing the Trend Knockout
setup (a) in Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating), mentioned recently (see recent
archives for more details). When we last left off, I was discussing using
a two-bar trailing stop on the remaining shares. There were no changes in this
stop (b) for Monday.
Continued Thanks!
Thanks again for the kind words about Wednesday’s commentary.
My goal is to reply to all of them over the next few days. Below is my favorite
so far:
Mr. L,
Anybody that has issues with down arrows is not a trader and should stronglyÂ
consider one of the following options:
1) Get a job. (This is a good thing as those of us that decide to becomeÂ
traders need people to build our cars, mansions, cook for us, etc. etc.)
2) Stop the self-medication and seek professional help. (Whether itsÂ
skipping the Prozac or hitting the pipe too much they need to quit.)
3) See your optometrist as your vision needs corrected; if you cannot affordÂ
to get your vision corrected (a distinct possibility for those that couldÂ
only go long the past 2 years) then consult a nearby 6 year old for theirÂ
opinion.
But most of all, if down arrows bother someone, they should stop badgeringÂ
you as you are too busy making “uncommitted assessments of theÂ
probability” of one thing happening over another.
Have a lovely day.
Zx
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“……readers will learn a great deal and…likely understand concepts they have heard of before but never quite “got.”……
K. Ashanti, Active Trader Magazine, February 2002
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