How Best To Play An Oversold Market
On Wednesday, the Nasdaq chopped back and forth in early
trading. Then after dipping lower, it began to rally. However, it found its high
around mid-day and then generally worked its way lower throughout the rest of
the day. This action keeps it at its 200-day moving average.Â
The S&P put in a somewhat similar performance but
wasn’t able to stay in the plus column.Â
As mentioned recently, like the Nasdaq, the 200-day moving average (circa
1060) remains a potential first target to the downside here.Â
So what do we do? The market remains
oversold. As you know, this creates a damned-if-you-do-and-damned-if-you-don’t situation. For those new to this column, this means that if you buy it, oversold
will become even more oversold. If you short it, it’ll bounce from
oversold. Therefore, continue to use any additional weakness as an
opportunity to scale out of existing
short positions as opposed to initiating new ones. And, yet again,
should the market gap sharply lower on the open, aggressive traders might
look for an opening gap reversal play.Â
Looking to potential setups, Carnival Corp.
(
CCL |
Quote |
Chart |
News |
PowerRating),
mentioned recently, still looks like it has the potential to continue lower out
of a First Thrust, especially if it can
take out Monday’s pivot low.
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
Click here for details.
Â
Â