Focus On These Sectors Until The Market Breaks Out Of Its Trading Range
On Monday, the Nasdaq gapped higher (a) but quickly found
its high and began to trade sideways. Then, late in the day, it sold off hard. This
action has it closing poorly (b) and puts it back into its trading
range. Â
The S&P also sold off hard after some initial
strength.Â
So what do we do? Well, since the indices
remain in a trading range, it looks like we’ll have to wait for another day. The
good news is, if you look hard enough, there are a few opportunities out
there. Selected commodity related issues that can trade contra to the indices
may be worth a look. Two groups here are showing up in my scans tonight:Â
energies and selected
metals & mining (e.g. some steel & iron). Also, defense stocks, which
can also trade independently of the indices, remain in a strong uptrend and
could be setting up soon. In general though, continue to keep positions on
the light side until the market breaks out of its trading range
decisively.Â
As far as setups, Burlington Resources
(
BR |
Quote |
Chart |
News |
PowerRating), in the
strong independent oil & gas sector, looks like it has the potential to
rally out of its first pullback since breaking out of a high level base. Wait
for entries* though, since it, the indys, and the rest of energy, were hit
fairly hard on Monday.Â
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
Click here to learn
more, or to order..Â
*As mentioned on Friday: If you’re new to momentum based swing trading and would
like more information (on the basics such as “waiting for entries”), email me and I’ll be happy to send the primer section
from my second book.