Is This The Low?
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
markets opening. Therefore, overnight events may alter the
outcome of these observations.
On
Thursday, the Nasdaq sold off but found its low fairly early (a). Then, during
the half-hour, it melted up nearly 100 points. This action has it closing on its
high (b).
The
traders I spoke with today all thought that the Nasdaq held up relatively well–even during the Dow’s nearly 400 point
massacre. This seems to suggest that tech is sold out, at least for
now.
In a more dramatic fashion, the
S&P, like the Dow, tailed lower (a) but recovered to close well (b).
The VIX rallied to its highest
levels since April of 2000 before tailing off. This suggests that
there was a level of panic in the market at its lows–a throwing in of the
towel.
All of the above suggests that
we’ll see a bounce in here. Is it the low? Of course, you know that I don’t know
and I don’t care. And if you follow this column, neither should you.
So what do we do? As you know, I’m not much of a
bottom picker. And, there are not too many stocks with momentum to the upside.
Therefore, as a momentum swing trader, I think I’ll sit this one out and see where this bounce takes us. If
the market begins to stall over the next few days, it’ll set up some wonderful
shorts. If we have a sharper, continued rally, then it might set up a few longs.
Only time will tell. For now, it seems that many of our shorts got squeezed
today. If you haven’t tightened your stops and/or taken profits, I suggest you
do so.
No setups tonight.
Best
of luck with your trading on Friday!
P.S. Reminder:
Protective stops on every trade!
“…helpful
and easy to understand…”
Alex
Germany
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