Black, Not Red, From Big Blue
On Monday, the Nasdaq gapped lower on the negative IBM news
(a). However, it quickly found its lows and rallied for a solid trend day
higher.
The S&P also rallied to close well after a probe to
much lower levels.
I especially like the action in the Q’s
(
QQQ |
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PowerRating) they
gapped down to near their February lows but reversed to close well.
The VIX gapped open on the IBM and Iraq news to near
1-month highs but reversed to close poorly. This action sets up multiple CVR buy
signals.
So what do we do? The fact that the market reversed in the
face of really bad news is a positive. This, combined with market timing signals
(Friday’s TRIN Reversal and Monday’s VIX signals) suggests the bounce from
oversold is underway. Therefore, for the nimble, look for a bounce play in the
index shares. And, for everyone else, focus on the long side but stick with the
strongest stocks in the strongest sectors.Â
Looking to potential setups, Pioneer Natural Resources
(
PXD |
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PowerRating),
in the strong oils-independents, appears to be resuming its uptrend out of a
pullback.
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…….While on the road I take your book and read it again and again in the evenings. It is a bible that should be read by all traders (and I’ve been in the business for 30 years). Oh, how I wish I would have had your book 30 years ago.
Anyway, keep up the good work!…..”Â
Thanks!
Bill B.
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