Dead Cat Waking
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
markets opening. Therefore, overnight events may alter the
outcome of these observations.
On
Friday, the Nasdaq lapped lower (a) and sold off for most of the day. After
probing (again) to new 2-year lows (b), it mounted a late-day rally which erased
all of the day’s losses. This action has it closing well (c) and in the plus
column.
The S&P made another spike lower before reversing to
close well. The candle people are calling this a “double hammer”.
I won’t bore with putting all
the charts from yesterday. Essentially, even with the reversal, we’re more
oversold.
What is noteworthy
is that the VIX once again spiked higher (a) and reversed to close poorly (b).
This spike was to levels not seen since 2000 and sets up for numerous CVR
buy signals.
So what do we do? I have a bad
feeling about this market on a long-term basis. Fortunately, my job isn’t to
predict the market long-term. BTW, did anyone see that guy on CNBC?…..Nasdaq
25,000 over the next five years (or whatever). God bless him. I wish I were that
good. If I were, I think I’d get fully long and go sit on my sailboat for
the next few years. Oh, where were we. Oh yeah, the markets. I still think a
bounce play in the indices is possible. Also, as you’ll notice below, there were
a few stocks that (finally) set up on the long side.
Use the Q’s
(
QQQ |
Quote |
Chart |
News |
PowerRating)
and the Spiders
(
SPY |
Quote |
Chart |
News |
PowerRating) for a potential bounce play. Make sure you use stops, lock in a piece if it works and
think hard before carrying too much overnight.
Labranch
(
LAB |
Quote |
Chart |
News |
PowerRating),
mentioned Thursday night and on the Pullbacks
Off Highs List, still looks like it has the potential to resume its strong
uptrend.
Multex
(
MLTX |
Quote |
Chart |
News |
PowerRating), also on the Pullbacks
Off Highs List, dipped below its recent support but reversed to close well.
This suggests that its uptrend remains.
For those who like pain, Cabot Microelectronics
(
CCMP |
Quote |
Chart |
News |
PowerRating),
another pullback,
looks like it has the potential to rally out of a choppy pullback.
Photronics
(
PLAB |
Quote |
Chart |
News |
PowerRating), on the Momentum
10 Technology List, looks like it has the potential to rally out of a
high-level cup and handle.
Random Thoughts
I’ve mentioned this to several
traders and they all agreed. The markets have become tougher and tougher to
trade as the many (through some our fault here at TradingMarkets?) have become
well educated. Tools and patterns that used to be used only by professionals are
now being used by the masses. It seems that everyone is trying to front run or
even fade signals. This makes for a tougher environment. Often, I find myself
more and more not trusting the first push. Essentially, what I used to do on an
almost mechanical basis, I now sit back and take more of a “show me”
attitude. That’s just my opinion, I may be wrong.
Best
of luck with your trading on Monday!
P.S. Reminder:
Protective stops on every trade!
“..I
love your book….”
Mark
F.
No risk, 30-day, money
back guarantee.