How To Survive A Bear Market
On Wednesday, the Nasdaq lapped lower and began
to bounce. However, it found its high early on and sold off for a
solid trend day lower. This action has it closing poorly and
near the 1950 downside target mentioned recently.
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The S&P also sold
off for a solid trend day lower. It too is closing in on a support
level.
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So what do we do? This is where I give my
oversold market canned speech: If you try to short an oversold market,
it’ll bounce. If you try to buy an oversold market, oversold will
become more oversold.Â
Considering the
above, there’s not too much to look at tonight.
On the short side,
Lowes Corp. (LTR)
looks poised to make another stair-step down out of a pullback from
lows.
Example Time
RF Micro (RFMD),
mentioned Monday and Tuesday, provides us with two examples. First, if
you got long at point (a)*, when it started to rally, then you would
have gotten stopped out today below the low of the setup (b). If you
weren’t in it and looked to go long on Wednesday, you would have never
gotten filled as it never traded above the prior day’s high(c)–no
tickee, no tradee.
A Cure For Longitis
A friend of mine, who can’t wait for the next
bull market, seems to keep losing money by aggressively buying stocks.Â
After contacting me in frustration, I suggested he put him a
“sticky note” on his quote screen which read “We’re
still in a bear market”. This seems to have solved his problem.
If you know anyone who suffers from “longitis,*”send them a
pack of sticky notes.
Best of luck with
your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*See Monday’s column “Semi
Dilemma” for details.
**Synonym for long only disease. Special thanks to
Natalie W. for letting me use her term.
“…I
think you have put together a terrific resource to help swing
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Rick F.
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