Here’s A Stock That Looks Poised To Resume Its Trend
On Monday, the Nasdaq chopped sideways but then sold off
fairly hard late in the day. This action has it closing poorly and puts it right
at its 50-day and 200-day moving average–which is also near the
bottom of its short-term trading range.Â
The S&P put in a similar performance. So far, it remains
above its 50-day and 200-day moving averages (not shown). And, so far, its
“Bow Tie” moving averages remain intact–it remains above its 20- and
30-day exponential moving averages. However, it, like other major indices, also remains in a
short-term sideways trading range.Â
In the sectors, most of tech, like the Nasdaq itself,
finished lower. Many areas such as the semis and software are approaching
multi-week lows. Biotech was hit especially hard. It appears to be resuming its
downtrend out of a pullback and looks like it has the potential to take out
(i.e. trade below) its multi-month lows. Even recently stronger areas such
as Internet are beginning to look questionable.Â
So what do we do? Although the indices
haven’t really done anything “wrong” (yet), I am concerned about the
ongoing weakness in tech. As one trader remarked today (regarding technology),
“It feels like there is a stealth bear market going on.” However, as
long as the market remains stuck in a sideways trading range, I don’t see any
reason to get too aggressive either way. Therefore, continue to trade at a
reduced size. On the long side, look for opportunities in stronger areas outside
of tech such as the transports, energy, and retail. On the short side, as
mentioned above, biotech appears to be resuming its slide out of a pullback. Â
As far as setups, Protein Design Labs
(
PDLI |
Quote |
Chart |
News |
PowerRating), in the
weak Biotech sector, looks like it has the potential to resume its longer-term persistent
downtrend out of a pullback.
 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.
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more, or to order..Â