Important Levels To Watch In The Indices
Looking to the indices, on Thursday, the Nasdaq lapped
lower and sold off hard throughout the morning and early afternoon. It then
traded sideways to higher for the remainder of the day. However, this wasn’t
enough to keep it from closing poorly.
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The S&P also sold off hard. This action has it
approaching the bottom of its recent trading range.
Looking to the sectors, the selling was broad based.
Some such as broker/dealer and insurance were hit hard. Technology, which has
been leading the market lately, wasn’t spared either. This included, but not
limited to, Internet, semiconductors, software and telecom.Â
The homebuilders, mentioned Wednesday night as a potential
transitional short, also sold off fairly hard. This action suggests that a top
may be in place here.
So what do we do? The fact that the S&P sold off
hard and is headed toward the bottom of its trading range is concerning. Further,
tech, which has been bulletproof as of late, joined in for the ride. Therefore, you should probably keep positions on the light side as long as the S&P
remains stuck in a trading range. Looking ahead, if the Nasdaq can hold its
breakout levels (circa 1680) then buying the pullback in technology could
present an opportunity. On the other hand, if the S&P takes out the bottom
of its trading range, circa 970, then transitional shorts (Bow Ties, First
Thrusts, Inverted Cup and Handles etc…) might offer the best opportunities.
Looking to potential setups, USA Interactive
(
USAI |
Quote |
Chart |
News |
PowerRating) is
in its first pullback since breaking out of a high-level consolidation. However,
wait for entries in light of Thursday’s poor market action.
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….. Your book on your swing trading method is succinct, straightforward, clear and above all useable. Thank you for the tools it provides. Please write more. You’re not just another writer, you’re a teacher who makes a difference…”
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