Little Blues
On Thursday, the Nasdaq lapped higher but found its high
within minutes and sold off hard. It did manage to chop its way higher by early
afternoon but resumed its sell off going into the close. This action has it
closing poorly.
The S&P put in a similar performance.
So what do we do? I still remain cautiously optimistic. The
strong trend from lows in the Nasdaq and many tech sectors still appears to
remain intact. True, we are seeing some breakdown in some of the previous high
flyers, but so far, we haven’t come unglued. Further, the market is becoming
oversold, the VIX is beginning to stretch away from its 10-day moving averages
and the 3-day average NYSE TRIN readings are climbing. Therefore, this could set
us up for a bounce over the next few days. I am not suggesting you be a hero
though. Wait for entries or signs of a reversal before becoming too bullish.
And, of course, honor your protective stops.
Looking to potential setups, Artisan Components
(
ARTI |
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looks like it has the potential to resume its persistent uptrend out of a
pullback.
Other
Dave,
Maybe it’s just my perception, but
it seems in the last few TradingMarkets articles, you seem to have forgotten the
direction of the biggest of the big blue arrows. Is it true or is it just me?
Fred P.
Okay Fred, the BIG blue arrows are still pointing down.
Notice the downward slope in the 200-day moving averages (the blue lines) of the
S&P and Nasdaq charted at the beginning of this column. Further, if you plot
the weekly charts (which I will do for you on Friday), you will gain some
perspective on this longer-term downtrend.
Looking to the shorter-term, so far, we are in an up leg
from lows. Therefore, I have been drawing “little blue” arrows lately.
Essentially I remain cautiously optimistic that we can make another leg higher.
However, if we don’t, I’ll be ready for potential transitional setups (i.e., a rollover).
Best of luck with
your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…Feel free to quote me, the book is fantastic. It is written for traders who want to know the real basis of
successful trading. No glory stuff. No hero tales. Plain old sound advice which is a rare commodity in this business….”
Mike Marlow
