Don’t Anticipate Too Much
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.
Last summer, I was offered the
opportunity to work with Kevin Haggerty at his Trading
With The Generals Seminar. I jumped at the chance and was glad that I did.
His
knowledge of the markets is truly amazing. If you are interested in taking your
trading to the next level, you should consider his upcoming seminar. Be warned
though, it’s an advanced workshop. Make sure you have the basics down and have been trading actively for
at least two years.
On
Thursday, the Nasdaq lapped lower (a), chopped around a bit, peeped its head
above yesterday’s high, and then finally sold off to close poorly (b).
In
the big scheme of things, not a day of huge significance. One would expect the
index to give up something after the largest up-day in history.
Looking to the charts, it still looks like the trend remains down.
Oh, I know all the arguments about what has happened historically after a rate
cut. It just looks like it hasn’t stopped going down just yet.
Looking to the S&P 500, I
find it interesting that the market stalled just shy of the 50-day moving
average (a). It reminds me of the old thermos joke*: how do it know?
So what do we do?
Long-term, the Fed thing will probably
kick in. For now though, it looks like the trend remains down. Therefore,
there’s no need to run out and bet the farm (which has a literal meaning for me)
on a bunch of longs in anticipation of an extended rally. Let the market digest its gains for a
while.
Looking to potential setups, Dow Chemical
(
DOW |
Quote |
Chart |
News |
PowerRating),
mentioned Wednesday night, appears to be rallying out of a pullback/high-level cup-and-handle-ish
formation.
Golden State Bancorp
(
GSB |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, looks like it could rally out of a three-bar
pullback from highs. As always, wait for a follow-through for an entry because it did
close off its high.
Burlington
Resources
(
BR |
Quote |
Chart |
News |
PowerRating) sold off early on Thursday but recouped much of the loss,
which suggests that its uptrend remains intact.
Amerada Hess
(
AHC |
Quote |
Chart |
News |
PowerRating)
appears to be stabilizing in its first pullback since its melt up from lows. For
those keeping score, technically, its also a Bow Tie
Setup.
Looking Ahead
The drugs
(
$DRG.X |
Quote |
Chart |
News |
PowerRating)
may offer shorting opportunities on the first pullback from lows. Hat’s off to
the Gor-man for the heads up on this one last week. Nice call!
Best
of luck with your trading on Thursday!
P.S. Reminder:
Protective stops on every trade!
* The thermos keeps the hot things hot and the
cold things cold–how do it know?
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