Bear Market Rally

Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
markets opening. Therefore, overnight events may alter the
outcome of these observations.

Tuesday, the Nasdaq gapped open (a) and looked like it would never look back. Then, after
some mid-day drifting, the rally resumed. There was a little selling going into
the close but it wasn’t enough to keep the index from closing well (b).

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On Monday night, I discussed
the fact that deeply oversold bear market can rally “extremely sharply at
any time” (Ok, those weren’t my words, I borrowed them from Mark Boucher).
Of course, at the time I didn’t know that that sharp rally would begin on
Tuesday morning. At any rate, now it becomes crucial to take it day-by-day and
setup-by-setup. Let’s see where this rally will take us. As I’ve said on every

previous bounce, if it rallies and sticks then we might look to go long on the
first pullback. If it rallies and stalls, then once again, we’ll look to get
short. For now, keep it light regardless of what side you trade.

Looking to potential setups, Tenet Healthcare
Quote |
Chart |
News |
, on the Pullbacks
Off Highs List
, has formed a Bow Tie , or if you prefer, a cup and handle.

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National Instruments
Quote |
Chart |
News |
mentioned recently and on the Pullbacks
Off Lows List
, still looks poised to resume its downtrend.

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Baker Hughes
Quote |
Chart |
News |
, mentioned recently, still looks
vulnerable. Just wait for an entry here as it did reverse intra-day to close

Don’t Fight The Tape/No Tickee No Tradee

I’m sure you noticed that the potential shorts mentioned
last night rallied sharply on Tuesday. However, except for BHI, none came anywhere
close to an entry. Wait for entries.

of luck with your trading on Tuesday!

Dave Landry

P.S. Reminder:
Protective stops on every trade!

“…..wonderful and especially clear book… I’ve
been enjoying it and integrating it’s techniques in my trading…”

Jeremy P.

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