Dead Cat Dead
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
market’s opening. Therefore, overnight events may alter the
outcome of these observations.
On
Tuesday, the Nasdaq lapped slightly lower (a) and after chopping around a bit, sold
off hard for a solid trend day lower. This action has it closing on its low (b)
and at its lowest close since January of 1999.
So what do we do? It’s
frustrating that we couldn’t get more of a bounce out of this oversold
condition. I think the best thing to do is continue to recognize that conditions
are poor and to keep trading light. I know this is probably obvious to most of
you but I continue to receive emails from those plowing ahead at full steam.
Looking to potential
setups, LaBranche
(
LAB |
Quote |
Chart |
News |
PowerRating),
mentioned recently and on the Pullbacks
Off Highs List, still looks like it has the potential to resume its strong
uptrend.
On the short side, Brocade Communications
(
BRCD |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Lows List, looks poised to resume its strong downtrend.
Random Thoughts
Along the lines of my recent “Random
Thoughts,” I continue to receive emails regarding how the
markets have become more difficult to trade. One hedge fund manager, for whom I
have the utmost respect, said to me today, “Nothing works anymore.”
At the risk of being
clichéd, one other point: If you’re getting your head
beat up, pull it out of the washing machine.
Best
of luck with your trading on Wednesday!
P.S. Reminder:
Protective stops on every trade!
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for writing such a fine book. Because I’m reaping larger trading profits from your methods, my dog Enzo is so much happier
now that I can afford to give him premium dog food….”
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M.
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