If You See These Two Things, Buy!
Looking to the indices, on Thursday, the Nasdaq opened soft
but soon began to rally. However, it found its high in early trading and
generally worked its way lower throughout the day. This action keeps it below minor resistance, circa 2100.
The S&P generally chopped its way lower. This action
puts it back below its recent highs.
So what do we do? Although most sectors still
remain in uptrends, technology (like the Nasdaq itself) continues to lag.
Further, the S&P is bumping up against its old highs. Therefore, even though
the longer-term uptrend remains intact, I’d like to see two things: 1) A
convincing breakout in the S&P (followed by an orderly pullback of course!)
and 2) Technology joining in for the ride. Until this occurs, especially since
meaningful setups remain difficult to find, you might want to sit on your
hands when it comes to establishing new positions. Rather, manage what you
have–make sure you are scaling out (i.e. taking partial profits) on longs
(especially since the S&P is bumping up against its old highs).
No setups tonight.
Erratum
Last night I wrote:
“If you played the last
pullback in the S&P (see the archive for 02/04/04), now might be a good time
to take partial profits and trail a stop higher.”
The archive I was referring to should have been 01/29/04.
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
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