Dr. Seuss Goes To Florida
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.
“How shall we count this ballot
box?
Let’s count it standing in our socks!
Shall we count this one in a tree?
And who shall count it, you or me?
We cannot, cannot count enough!
We must not stop, we must be tough!”
from
“Dr. Seuss Goes To Florida”, author unknown
Â
On Friday, the Nasdaq gapped higher on the open (a) and
closed on its high (b). It wasn’t as “clean” as the daily chart
suggests but a solid day nonetheless.
This puts it right near the resistance of Wednesday’s pivot
high (c). 3,000, which will probably correspond with the 50-day simple
moving average (SMA) when/if it gets there, will likely be the next resistance
level.
The old lows (d) remain a likely target to the downside.
Heads up! Right
after the cash close, the Florida Supreme Court announced that they would allow
more counting of the votes. On the news, the Dow Futures got whacked for
about 200 points, the S&Ps lost 35 points and the Nasdaq gave back 155
points.
This choppy, news
driven environment is frustrating at best for the swing trader. You get
positioned in some great shorts, the market has a sharp rally, stops you out,
then, the downtrend resumes. One long side, money rushes into the defensive
issues, leaves them for tech, then back to defensive issues–right after
stopping you out. There’s no meaningful follow through from one day to the
next. In this type of environment, proper money management is crucial. In
addition to taking smaller-than-normal positions, make sure you are using
protective stops, taking partial profits quickly and are trailing your stops. If
you need a refresher on the above, read my four-part series on money
management, After
The Setup: How To Enter, Place Stops, Trail Stops and Take Profits, Ten
Tenets Of Swing Trading and all the other articles on the subject under Trader’s
Lessons: Money Management.Â
So what do we do? On a night like this, right after a big
news announcement, I really hate to recommend any setups. The market will likely
have a sharp down draft on the opening. After that, it’s anybody’s guess. With
that said, here are a few stocks of interest:
Caterpiller
(
CAT |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, looks poised to rally out of a three-bar pullback. Ditto for
Dow Chemical
(
DOW |
Quote |
Chart |
News |
PowerRating).
On the short side, Diamond Offshore
(
DO |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Lows List, has pulled back into the area of its recent break
down–a likely resistance zone. Just wait for follow-through to the
downside as it did close well on Friday.
Sealed Air Corp.
(
SEE |
Quote |
Chart |
News |
PowerRating),
mentioned recently, still looks like it has the potential to break lower out of
a low-level consolidation.
Best
of luck with your trading on Monday!Â
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
Where can I find a good swing trading book?
Click on the above
and have a look.
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