Focus On These Areas Until The Market Corrects
Looking to the indices, on Monday, the Nasdaq sold off in
early trading but stabilized by mid-morning. It then trended higher throughout
the afternoon. This action has it closing well and at multi-year closing highs.
The S&P chopped around before gaining strength going
into the close.
So what do we do? After Friday’s performance
(or lack thereof), I thought for sure that we would see some follow through
corrective action on Monday. I guess 2004 will be the year the market never
corrects. I’m joking of course. We all know that there is a normal ebb and flow
to markets. And, buying an overbought market is never prudent (although it has
worked so far this year!). Therefore, at the risk of boring you to death,
continue to wait for a pullback before looking to establish new positions
(outside of commodity areas such as energy that can trade
contra to the overall market). On the short side, the homebuilders appear to be
attempting another leg down out of a big picture topping formation.
Looking to potential setups, Chevrontexaco
(
CVX |
Quote |
Chart |
News |
PowerRating), in
the strong energy-majors, looks like it has the potential to resume its
longer-term uptrend out of a pullback. Wait for an entry though since it has
been weak as of late.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S.
In February I’m having a small, exclusive three-day swing trading seminar and I would like you to attend.
Click
here.