Bounce Or Blue Arrows?
On Tuesday, the Nasdaq opened flat, chopped higher, chopped
lower, rallied sharply, sold off sharply and then rallied sharply one last time.
In spite of this frustrating intraday action, it actually looks like it has the
potential to bounce on the daily charts based on the fact that it
“hooked” back above its prior lows.
The S&P was also choppy. Although it too strengthened
going into the close, it was unable to get above its prior lows.
So what do we do? Relatively high three-day average NYSE TRIN
readings combined with a stretched VIX (also a CVR III-Modified Buy signal) and
the reversal from lows in the indices suggests we are in bounce mode. I
emphasize bounce because the blue arrows are still obviously pointing down.
Therefore, for the brave, you might look to nibble at the index shares. Just
don’t overstay your welcome since you are fighting a longer-term trend. As far
as individual stocks, I think both sides can still be played. On the long side,
stick with stocks in the few strong sectors such as hospitals (but wait for
entries!). On the short side, focus on issues that have recently rolled over and
have pulled back vs. those more oversold issues. Said another way, look for
inverted cup and handles such as those setting up in the med labs.
Looking to potential setups, Triad Hospitals
(
TRI |
Quote |
Chart |
News |
PowerRating)
looks like it has the potential to resume its uptrend out of a pullback.
Picky, Picky, Picky
Several of you emailed me to point out that “it’s a
marathon not a race” is not correct because a “marathon” is a
race. It’s a figure of speech.
Best of luck with
your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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