I’m Feeling Good, I’m Feeling Good
On Wednesday, the Nasdaq opened flat, and after a
brief blip up, sold off hard. However, by early afternoon, it reversed
and rallied to close fairly well. This action leaves a tail lower. I
think the candle people call this a “hammer” as the market
“hammers out” a bottom.

The S&P also
tailed lower before recovering to close well.

So what do we do?
Tonight (Wednesday) we once again have a plethora of buy (and repeat
buy) Market Bias Signals. Will they finally work? No one knows for
sure, but, I’m feeling
better about them now than I have for the past few
days. I think we could continue to bounce from Wednesday’s intraday reversal. Therefore, nibble on the long side but
don’t forget what your sticky note says.
Looking to potential
setups, Syncor International (SCOR),
mentioned Tuesday, still looks like it has the potential to resume its
uptrend out of a pullback.

I think the
financials are still worthy as potential shorts. With that said,
Golden West Financial (GDW)
looks poised to continue its meltdown out of a pullback from lows.
Walk Through,
Contd.
As
promised, tonight
let’s take a look at Cubist Pharmaceuticals (CBST),
a stock mentioned recently. On Tuesday, it gave us* an entry above
Friday’s high (a)
at 42.20. A protective stop was immediately placed
below the low of the setup (41.00) for an initial risk/profit target
of 1.20. The stock then rallied to 43.40
(b)
and we exited half our
initial shares and moved our stop on our remaining shares to breakeven
— the same as our entry
(a).
Note: even if you didn’t take partial profits here, the stock’s rally
continued on Wednesday
(c), giving us another chance to take partial
profits. Unfortunately, the stock then reversed to stop us out of our
remaining shares (d). As you can see, without money management, this
slightly positive trade would have been a potential losing trade.Â
For
more on how to manage positions, see my articles under Money
Management.

Best of luck with
your trading on Thursday!
meeting you in four weeks at TradingMarkets
2001. Don’t hesitate to register, because in addition to showing you every
important variation on pullback setups, I’ll also be teaching you my
favorite new techniques including: how to capture trends before the
crowd using “transition in trend” patterns,
and how to ride huge momentum off false moves…both
to the long and short side.
P.P.S. Reminder: Protective stops on
every trade!
P.P.P.S. Special thanks to Jennifer
Trynin for letting me quote her song in my headline.
*This should not be construed as direct
trading advice. It’s just much easier to write about the positions in
first person.
“…Dear
Mr. Landry,
I want to send you this note to thank you for the excellent book that
you have written. I have enjoyed so much reading your book and I
appreciate for your hard work, creativity and professionalism. Your
book is a must-read for every serious trader. It is simple,
concise and to the point, but also full of useful detail. Again, thank
you for such a wonderful job….”
Pablo C.
Argentina
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