Do This Until The Market Breaks Out Of Its Range
On Tuesday, the Nasdaq initially bounced but then began to
sell off. However, it found its low by mid-morning and then rallied for the rest
of the day. This action has it closing well and reversing at key support–its
50/200 day moving averages and its June lows.
The S&P put in a similar performance. This action has
it reversing at its “Bow Tie” moving averages (not shown)/near the
bottom of its short-term trading range.
So what do we do? Like the indices, many
sectors turned around on Tuesday at key levels. For example:
Internet found support at its pullback lows. The semis reversed at a potential
triple bottom. And, biotech reversed after tagging its recent lows. Although
this is encouraging, consider this: the market has changed direction in 8 out
of the last 10 days. Therefore, until we see a breakout (or breakdown), we
should continue to play this as a range bound market. For momentum traders this
means waiting until some sort of meaningful trend evolves.Â
No setups tonight.
 Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
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