Back To Old Lows?
On Tuesday, the Nasdaq gapped lower and sold off hard in
early trading. It then chopped back and forth for much of the day before
resuming its selloff going into the close. This action has it closing poorly
and suggests that it will challenge its summer lows.
The S&P also sold off hard. It too looks like it has
the potential to challenge its old lows.
The VIX spiked higher. This action suggests that there was
some panic to Tuesday’s selloff (duh!).
So what do we do? Tuesday’s action obviously has the market
oversold. And as you know, this doesn’t mean we can’t go lower. However, I
think you are better off waiting for the next bounce before looking to get
short. Therefore, in the meantime, you might want to create a list of stocks in
downtrends (maybe start with the semis?) to short when this occurs.
No setups tonight.
What He Said
Back in my fraternity days when someone would give a
eloquent speech, I’d raise my hand, point to that gentleman and say “what he
said”. Essentially, I could not agree more with Larry’s weekend piece.
While shooting my video, Larry and I took a break right before we started the
psychology section. During that break, we (who, as traders are pretty much at
opposite ends of the spectrum) were discussing the importance of being consistent.
Larry made a point about a trader who “claimed” to play the
tops, bottoms, sideways, trend and the middle. We both agreed that it could not
be done, at least not all the time* like this trader claimed. Anyway, rather that
waste any more of your time, “what
he said“.
Best of luck with
your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*I do occasionally take a small position against the
main trend (gasp), but only in the index stocks/futures when I have multiple timing
signals.