El Correcto
On Wednesday, the Nasdaq opened softer and after a quick
reversal continued lower in early trading. It then drifted higher going into
mid-day but sold off all afternoon. This action has it closing poorly.
The S&P was also hit fairly hard. This action puts it
back below its recent breakout levels.
So what do we do? Well, it looks like the correction is
here. Duh! Many areas of tech (such as those mentioned last night: Internet,
telecom, software and the semis) ended lower like the Nasdaq itself, but so far,
just appear to be correcting. I am concerned about the action in the S&P and
the Dow (now below pre breakout levels) since I think that all three indices
should move in tandem if we are to have a meaningful continuation higher.
Further, if the Nasdaq also slides back into pre-breakout levels, then all bets
are off. For now though, I think we can start to look to get long some of the
stronger technology areas (e.g. mentioned above). However, keep it light due to
the fact that trading can be thin and choppy around holidays and wait for
entries in light of the magnitude of Tuesday’s sell off.
Looking to potential setups, even with Tuesday’s sell
off, the Internet: software and services sub-sector still appears to remain in a
persistent uptrend.
Considering the above F5 Networks
(
FFIV |
Quote |
Chart |
News |
PowerRating) is setting up
as a pullback/TKO.
Other
Just yesterday I received an email from someone who had
given up waiting for a correction and was “just buying.” This is
normally a good sign that a correction is near. In the future, I’ll make sure I
post this “correction indicator” as soon as I receive it.
Best of luck with
your trading on Wednesday!
Dave Landry
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