Is There Underlying Weakness?
Hey Dave
Didn’t Noble
(
NBL |
Quote |
Chart |
News |
PowerRating) trigger on
Thursday? Why did you show it again for Friday?
Yes, it triggered but didn’t really go anywhere. In a case
like this, because the stock is still setup (in this case as a pullback/TKO), I
will show it on subsequent days.
Big Dave, I traded NBL on
Thursday, placed a stop just below Wednesday’s low but got stopped out before it
took off. What gives?
Since the bottom of the pullback/TKO can be a target for
market makers, you have to give stocks some “wiggle room.” In general,
for a stock in the $40-$50 range, for swing trades, your stop should be in the
$2 range (note: more volatile stocks may require looser stops). This will help (but certainly not guarantee!!!) to keep you from being
stopped out prematurely.
Looking to the indices, on Friday, the Nasdaq chopped back
and forth but did manage to close in the plus column. This action keeps it above
its 50-day moving
average.
The S&P put in a somewhat similar performance. This
action keeps it at new highs for the year.
So what do we do? Tonight (Friday), my database
is generating a plethora of shorts. And, on the long side, I’m only seeing
commodity related stocks such as energy and metals/mining setting up. I hate to fight the
tape with the S&P making new highs, but in general, it’s usually a good idea
for me to pay attention to what the database is telling me. Therefore, on the long side, continue to
focus on commodity related stocks (those areas mentioned above). On the short
side, for the aggressive, look for opportunities in those areas that have
recently thrust down from new highs and subsequently pulled back (i.e. those
areas setup as a First Thrust). These include: retail, homebuilders, computer
hardware (most), and the semis.
Looking to potential setups, Pulte Homes
(
PHM |
Quote |
Chart |
News |
PowerRating), in the
aforementioned homebuilders, looks poised to continue lower out of a First
Thrust.
Best of luck with your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
P.P.S. Learn my best swing
trading strategy in my new interactive CD-ROM. Click
here now for details.