Let’s Go To The Charts
On Monday, the Nasdaq lapped lower and continued to sell
off hard in early trading. Then, after trading sideways for much of the day, it
resumed its sell off going into the close. This action has it closing poorly and
just shy of multi-month closing lows.
The S&P had a similar day with the exception that it
was hit even harder.
This action keeps puts it at multi-month closing
lows and suggests that it will take out the bottom of its recent trading range.
The Dow also closed at multi-month lows.
Looking to the sectors, a lot of interesting action took
place on Monday. This includes (but is not limited to) the following:
The banks broke down out of their trading range. This
action suggests that their downtrend remains intact.
Broker/dealer also broke down hard out of a trading range.
As did insurance.
Telecom accelerated in its downtrend.
Even an area that one would think would be strong in this
environment, sold off hard to new multi-year lows.
So what do we do? As you can see, “real”
stocks are being sold. In fact, those stocks continue to get hit even harder
than the more speculative issues. This action further confirms that all stocks
are vulnerable as a source of funds. Therefore, based on the above, the short
side is once again the “obvious” play. However, I would
keep it light based on the fact that we are quickly becoming oversold and remain
an event-driven environment. And, at the risk of preaching, continue to use the
news to your advantage–on the sell offs, look to trail stops/take
profits.
No setups tonight.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
P.P.S. FYI, 6 and 12-month trading service
subscriptions (including upgrades) are 10% off through March 12th.
“….It was super book and helped me quite a bit orchestrate many of the individual tools and rules I had been reading about into an integrated trading strategy. Anyhow, thanks for great book and great web
site….”
Marty
