Forget About Playing The Bounce, Stay With The Trend
On Thursday, the Nasdaq rallied early but quickly found its
high and began to sell off. It found its low around mid-day and then generally
worked its way higher for the remainder of the day.
This action has it “tailing” below its May lows.
The S&P put in a somewhat similar performance.
So what do we do? The fact that the
indices ended in the plus column after tailing down to multi-month lows suggests
that the market could be in bounce mode. This is especially true in the Nasdaq,
which reversed after hitting its lowest level in nine months. So we should run
out and buy, right? No. I don’t think this in-and-of-itself is reason enough to
get bullish. The trend still remains down. And, I’m not convinced that traders
will be willing to hold stocks going into the weekend. Therefore, stand aside,
let the market bounce and then look to put on some new short positions.
On the long side, the energies recovered after trading lower. Although there are
some issues breaking down, overall this suggests that they have the potential to
resume their uptrend out of a pullback.
As far as setups, for those with bit ones*, Chicago
Mercantile Exchange
(
CME |
Quote |
Chart |
News |
PowerRating), mentioned Wednesday night, still looks poised to resume its slide out of a First
Thrust. Use caution though since this one can
move a half a dozen points in a flash (therefore, requires a very loose
stop).
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
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*Trading accounts