If You Trade Trends, This Is Something You MUST Avoid

On Friday, the Nasdaq opened flat to firmer but soon
found its high and then sold off for a solid trend day lower. This action has it
closing poorly, it gives back all of Thursday’s gains, and it puts it back
to its 200-day moving average.

The S&P put in a similar performance. This action gives
back all of the gains (and then some) from Thursday’s attempted breakout
(a).

So what do we do?
As I’ve mentioned in the
past, breakouts are prone to failure. That’s why I’m not a breakout trader (not
that there’s anything wrong with that!).
Friday’s action puts the
indices back into their shorter-term sideways trading ranges. And, as you know,
“trading range” is the nemesis of the momentum trader.
Therefore, you might want to continue to keep positions on the light side.

As far as setups, heeding the above warning,
Amphenol
(
APH |
Quote |
Chart |
News |
PowerRating)

looks poised to resume its recent rollover out of a Bow Tie.

Question (s) Of The Week

Last week I was asked the following question in several
different forms:

Q:
If you had a profitable short and saw the market was bottoming would you cover early or keep your loose stop?

A:
Because you never know if the market is truly bottoming,
I’m more inclined to stay with existing positions. In some cases I may hedge by
buying index shares–but only if I had market timing signals triggering.

FYI, the above was covered in more detail during last
Wednesday’s audio/visual presentation (email me if you need a link to it and the
archives of prior presentations).

Best of luck with your trading on Monday!

Dave Landry

dave@davelandry.com

P.S. Reminder: Protective stops on every trade!

P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
here
for details.