Buy The Buy Signals?
On Friday, the Nasdaq chopped around in a narrow range.
Ditto for the S&P.
The VIX is reversing from a
“stretched” (i.e., CVR III Buy) condition, forming a CVR-III Modified
buy signal.
The three-day average of the NYSE TRIN is reversing from
an oversold condition, forming a TRIN Reversal buy signal.
So what do we do? The oversold nature of the market
(and the potential for oversold systems to trigger buys) combined with the above
buy signals suggests that the market has the potential to bounce. My main
concerns are a) recent choppy action and b) the fact that these are countertrend (i.e. against the big blue arrows) signals. Therefore, I think both sides can still be
played — just
wait for entries. For the aggressive (e.g. daytraders), look to play a reversal
in the index futures/stocks, especially if they gap lower on Monday and show
early signs of rallying.
Looking to potential setups, the banks appear poised to
continue their rollover. This is especially true in selected areas such as the
regionals and S&Ls.
Considering the above, Golden West Financial
(
GDW |
Quote |
Chart |
News |
PowerRating)
looks poised to continue its downtrend out of a Bow Tie.
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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read…I actively mentor junior traders using your method…”
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