It’s A Marathon
On Monday, the Nasdaq opened flat and after a brief blip
up, sold off hard. Then, after some mid day chopping and drifting, it resumed
its sell off. This action has it closing poorly and puts it right at its May
lows.
The S&P also sold off hard. It took out its May lows decisively.
So what do we do? Obviously, the trend remains down. At
least that what my blue arrows are saying. However, use caution shorting such an
oversold environment–make sure the issues you consider are not oversold (i.e.
are in fairly deep pullbacks from lows). On the long side, I still like gold
stocks because a) they can trade contra to the overall market and b) because the
AMEX Gold and Silver Index
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) appears to be rallying out of a
pullback from highs.
Amex Gold and Silver Index
Looking to potential setups, Barrick Gold
(
ABX |
Quote |
Chart |
News |
PowerRating),
mentioned recently, still looks
like it has the potential to rally out of a pullback.
On the short side, Sabre Group
(
TSG |
Quote |
Chart |
News |
PowerRating), in the weak
software sector, looks poised to continue its downtrend out of a pullback from
lows.
It’s A Marathon
It seems that lately I have been swamped with emails from
those having difficulties in these markets. View the present environment
as a chance to learn. Learn about how bear markets can linger. Learn about how
they can be choppy. Learn that by sticking with the strongest sectors on the
long side and the weakest sectors on the short side opportunities can still be
found (e.g. the home builders went up 300% earlier this year before they began
to rollover). Learn that as a private trader you are your only judge–you are
not held to quarterly returns. Said another way, learn that you don’t have to
put your hard earned money on the line when you don’t see opportunities. Learn
that it’ll probably take you just as long (or unfortunately longer) to learn
trading as it did you prior (current) profession. As I mentioned in
Friday’s column: let the markets come to you, “it’s a marathon, not a
race”.
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….Give a person a fish or teach them to fish I believe is an appropriate metaphor – I know traders who will lose 10k in a day but balk at paying $100 bucks for your fishing pole- best book in my trading library. Column continues to be great, no bs.
Thanks,…”
Pete
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