How Will It Correct?
On Friday, the Nasdaq didn’t do a whole lot. It essentially
chopped around in a narrow range.
The S&P was a big yawn too.
So what do we do? Markets
correct by either selling off or moving sideways. So far, it’s the sideways
variety. However, based on the oversold nature (see recent commentary for a list
of these indicators) and timing sell signals, I’m still betting on the sell-off
variety. The good news is that the database turned up several stocks that
have already corrected and look poised to continue their uptrend. Therefore, I
think we should continue to look to pick up a short or two and nibble (only)
on the long side.Â
Looking to potential setups, one of those stocks that has
already corrected and looks poised to continue its uptrend is Network Associates
(
NETA |
Quote |
Chart |
News |
PowerRating). It is set up as a Trend Knockout, or, if you prefer, its first
pullback since breaking out of a base.Â
On the short side, Washington
Mutual
(
WM |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks poised to continue its
downtrend. If you don’t like this one, I still think the S&L’s are poised
for another leg lower. And, once again, tonight’s Pullbacks
Off Lows List has a plethora of these stocks. Take your
pick.
Trail ’em If You Got ’em–Continued
Lately, I have been showing where a two-bar trailing stop
could be used on Immunex
(
IMNX |
Quote |
Chart |
News |
PowerRating), a stock mentioned recently (see archives).
Once again, I have updated the chart. I was hoping that the stock would keep
running so I would have a great example. Well, you know the saying, hope in one
hand and you know what in the other and see which one gets filled first. Â In
all seriousness, if you would have entered where the Trend Pivot Pullback
suggests 24.75 (a) and placed your stop at 23.20 (b)Â for a risk of 1.55. You
could have taken partial profits at 26.30 (c) and moved your stop to breakeven (which was about the same as the trailing
stop). Connors has dubbed this simple
money management technique “2-for-1” Money Management. For more on
money management, see my articles under Traders
Lessons.
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“Your book is well written, concise, and laid out so that anyone with a
rudimentary background to a master’s level trading education could be very successful. You have done a superb job! My hat is off to you Mr. Landry!!!”
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