Don’t Fight The Tape

On Monday, the Nasdaq lapped higher and initially
continued higher but then chopped lower to give back most of its
gains. However, by early afternoon, it mounted an impressive comeback.
This action has it closing well and at multi-month highs.

 

The S&P also mounted an impressive comeback
late in the day.

 

So what do we do? 
Obviously, after Monday’s action, we’re now more overbought. This
doesn’t mean we can’t go higher though.  As you now, "more
overbought" can often become "even more overbought".
Therefore, don’t fight the tape. However, you might want to still
consider a short or two just in case we correct in here.  

Looking to potential setups, Silicon Labs (SLAB),
mentioned Friday night and in the strong semi sector, has now formed a
Trend Pivot Pullback. This is where a stock in a pullback has a
one-day false rally. This action often traps the pullback players and
attracts eager shorts. If the stock can take out (trade above)
Friday’s high then these people may be forced back in or forced to
cover respectively. 

 

On the short side, Elan Corp. (ELN),
mentioned Friday night, still looks like it has the potential to
resume its downtrend out of a pullback from lows.

 

Best of luck with
your trading on Tuesday!

Dave Landry

sentivetradingco@prodigy.net

P.S. Reminder: Protective stops on
every trade!

"…….I
think it is certainly a "must have" for anyone interested in
successful short-term trading…." 

John D.

 

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