Broad-Based Selling Could Offer Numerous Opportunities Soon
On Tuesday, the Nasdaq opened flat but quickly began to
sell off. It found its morning low late in the morning and rallied back to near
its open. However, this failed and the index sank throughout the afternoon. This action has it closing poorly and
keeps it below its
50-day and 200-day moving averages.
The S&P was hit harder. It seemed to play “catch
up” to Friday’s poor Nadsaq performance. Non-tech areas such as banks,
brokers and retail contributed to the losses here. This action has it closing
poorly and well below its 50-day moving average.
So what do we do? As I tool through hundreds of charts
tonight, I’m noticing that the selling is broad based. As one might expect, technology
has been recently hard hit, but now other sectors such as the aforementioned banks,
retail and broker/dealer are joining in. Based on this, we could see numerous
trend resumption (e.g., pullbacks) and trend transition (e.g., First Thrusts, Bow
Ties, Inverted Cup and Handles) setups on a bounce. For now though, based on the
oversold nature of the market, probably the best thing to do is to wait for that
bounce. If you took trades in the recently mentioned oil service stocks, you
might want to trail a stop based on Tuesday’s action.
No setups tonight, wait for a market bounce before looking
to get short.
Other
FYI, I was on ETrade’s “The Trade” on Tuesday (www.etrade.com/thetrade).
Check it out if you get a chance.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….recently read your book and thought it was one of the best I have ever read, and I read
a lot of them….”
Sean G.
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