Blue Arrow Still Valid
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.
On
Monday, the Nasdaq opened flat and found its high early on. Then, after some
chopping around, it sold off for a solid trend day lower. The action has it closing
poorly, at fresh lows and suggests that the big blue arrow is still valid.
So what do we do? As you know, I like to trade in the direction of the trend.
However, I also like to avoid oversold markets when initiating new shorts and
overbought markets when initiating new longs. In other words, I prefer to trade
pullbacks versus breakouts. With that said, focus on the short side but only on
those stocks that have pulled back from longer-term strong downtrends.
Looking to potential setups, the Biotech Holders
(
BBH |
Quote |
Chart |
News |
PowerRating) and the Pharmaceutical Holders
(
PPH |
Quote |
Chart |
News |
PowerRating) both mentioned recently, appear to be resuming their downtrends.
Cooper Industries
(
CBE |
Quote |
Chart |
News |
PowerRating), on
the Proprietary
Implosion List, looks poised to resume its meltdown.
T Rowe Price
(
TROW |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks
vulnerable.
Example Time
Simple techniques like waiting for entries will help to
keep you out of trouble. Notice Advanced Micro Devices
(
AMD |
Quote |
Chart |
News |
PowerRating), the first
potential long mentioned in a long time, was creamed on Monday (a). However,
also notice that it never triggered (b) (i.e. traded above the prior day’s
high). As you can see, waiting for entries can often keep you out of trouble.
Other
Well, it’s official. I’ll be at Tony’s seminar.
The bride didn’t take too kindly to my joking that this might not be the groom’s
last wedding.
Best
of luck with your trading on Tuesday!
P.S. Reminder:
Protective stops on every trade!
“….Dave’s book on
swing trading has been of great benefit to me in my trading. I hope you will pass along my heartfelt gratitude for the clear, uncluttered, and very effective techniques Dave has revealed.….”
Garrard
G.
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