Impressive, But Choppy

  • October 11, 2001
  • Dave Landry

 

On Thursday, the Nasdaq gapped up on the open and
then chopped around. Then, late in the day, it rallied to close well.

 

The S&P also ended up nicely and closing
well. It will be interesting to see how the indices perform once (or
if) they get above their 50-day moving averages.

 

The daily indices
don’t tell the whole story. It’s a little choppier than it appears on
the surface. If you get a chance, take a look at the Nasdaq intra-day
chart and you’ll see what I mean. This makes for difficult position
trading.

So what do we do? 
I have to admit, the recent rally is impressive. The word is, many
intermediate term players are scrambling to get long based on recent
signals that, as a group, they tend to follow. It seems that no one
wants to be left behind. Me? As a short-term trader, it’s not as
important for me to pick bottoms. Yes, the momentum is impressive.
However, we are getting a little overbought in here. Therefore,
continue to nibble on the long side but, especially
because of
the choppy nature, honor your stops. Also, now may be the time to
begin to watch for a few shorts setting up just in case this isn’t the
“real deal.“

Looking to potential setups, the defense issues
sold off on Thursday but still look like they are setup as pullbacks
from highs. Take a look at the leaders in tonight’s Pullbacks
Off Highs List for ideas. Raytheon* (RTN)
is a good example of what you will find there. 

 

Some of the individual bank issues look like they
may be setting up for another leg down (see archives from last week
for details of the last leg down).  With that said, Comerica (CMA)
mentioned recently, may be setting up again as a pullback from lows. 

Best of luck with
your trading on Friday!

Dave Landry

sentivetradingco@prodigy.net

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

*If anyone from Raytheon is reading
this, feel free to send me a color radar (or any marine electronics
for that matter) to demo. I promise glowing reviews.

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You must have had many people read your book and those questions must
have come up. That was excellent. 

I liked how you treated the very important psychological factors
related to investing success. Many books talk about “how to
trade” but don’t address how we traders sabotage themselves by not
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Richard D. 

 

 

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