Complacency: Bear Update
On Thursday, the Nasdaq opened lower and chopped
around. Then, late in the morning, it gained footing and trended
higher. It did give up some of these gains going into the close, but
still managed to close well.
Once again, the 50-day moving average (a)/circa
2100 looks like a potential target/resistance level to the upside.
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The S&P also had
a good day. It,
too,
is approaching its 50-day moving average.
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The VIX, an excellent
measurement of complacency,
imploded on Thursday. This brings it to near levels not seen since
September of 2000.
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The Nasdaq 100 VIX ($VXN.X)
also fell.
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So what do we do? The complacency as measure by
the VIX/VXN makes me wonder if the market will find high within the
next few days. It’s definitely an early warning sign worth watching.
Therefore, nibble only on the long side and continue to build your
potential shorts list–don’t be a hero though, wait for the tape to
turn before pouncing.
Looking to potential
setups, ICN Pharmaceuticals (ICN),
on the Pullbacks
Off Highs List, appears to be finding support around 32 and
change. This action suggests that its uptrend remains intact.
On the short side, in
spite of all my pay per viewing of Little Nicky, Echostar
Communications (DISH),
on the Pullbacks
Off Lows List, looks poised to resume its downtrend.
Random Thoughts
Several of you guys
(and gals) emailed me on Sanmina (SANM),
mentioned recently. Thanks for the kind words. From the emails it
appears that most of you entered when it gapped slightly lower (a),
trailed you stops (b) and exited this morning on the panic sell off
(c). Congratulations! You played it well. Next time, could you
remind me to read my own column?
No Tickee, No
Tradee
Today’s “no
tickee, no tradee” award goes to Capitol One Financial (COF),
a potential short mentioned last night. Wait for entries.
Best of luck with
your trading on Friday!
Dave Landry
Questions? Comments?
Drop me a line at sentivetradingco@prodigy.net
P.S. Reminder: Protective stops on
every trade!
P.P.S. Several of you have asked for a
Bear update. Here it is:
Hey, the markets have been tough
lately!
“…I
would like to thank you for your excellent book. After reading it, I
said wow.. Finally, there is light in the tunnel!…..
Dan S.
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