Corrective Phase
On Thursday, the Nasdaq chopped around but somehow managed
to tack on a few points.
Can you believe it? It’s now rallied enough for me to start
plotting the 200-day moving average again.
The S&P also was choppy.
So what do we do? The panic
buyers from Wednesday appeared to take the day off. I’m still bullish,
but it looks like we may be entering a corrective phase. Therefore, you might
want to lock in on partial profits and tighten stops. Look to play both sides.
Looking to potential setups,
Cephalon (CEPH),
mentioned Wednesday night, still looks like it has the potential to rally out of
a pullback.
Should I Stay Or Should I Go
Continued / A New Set Up?
When we last left off (see
archives), I was discussing whether you should exit or wait for your stop to get
hit on trades that don’t work right away. I was using Boston Scientific (BSX)
as a real–time
example. On Thursday, it broke below the recent support (a), so, I guess in this
example an early exit would have been the way to go. My intent was to show that
sometimes moves take a little time to get going. Oh well.
I also have been discussing the
fact that BSX is set up as a low–volatility
situation. Wednesday night’s comments: "For the
nimble, you might want to consider a reversal play if the stock first breaks
lower and then reverses" created a lot of questions. The theory
is that sometimes the first move out of a low–volatility
situation is a false one. Notice how it made a move lower (a) on Thursday. This
may be a "head fake" before resuming the longer-term uptrend.
And The Winner Is
Earlier today, I drew three
random names from over 200 correct entries for a free 1-yr, 6-mos, and 3-mos
subscriptions to my
swing trade alerts. The winners are:
#1 Pat T.
#2 Gary W.
#3 Maria B.
You should start receiving my
service by early next week.
Thanks to all for entering. The
correct answers were #1 Bear (although he might be "Chuck" now), #2
03/09/200–the first close above 5000 for the Nasdaq and #3 Moron. See
archives if none of this makes any sense to you.
Best of luck with your trading
on Friday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
"…….Your
instructions and techniques were the first that I have read that are easy to
understand, follow and duplicate without needing a masters degree in
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Dave F.
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