Looking to Brighter Days Ahead
One of the most challenging aspects of trading is the
waiting. You can have a good mastery of strategies and an understanding of risk
control, but if you don’t have the discipline to wait for the proper setups to
line up — you’ve got a problem.
It has been five months since my May
24, 2000, “Chart of the Day” in which I showed you a 61.8% retracement between
the Oct 8, 1998, low and the March 9, 2000, high on a Weekly Nasdaq Composite
Chart.
The price level of that 61.8% retracement, around 2799, was hit
and punctured in Wednesday’s pre-holiday tankage.
Given that this is weekly chart, we are allowed some time to watch the market “settle” at this price level and bounce around a bit. So I’m not
going to jump to the conclusion that on Friday and into Monday we’re going into freefall mode. On the contrary, traders are going to be heading into the
holiday so depressed that–from a contrarian standpoint–the market seems more
set to bounce than tank.
Another clue giving us hope for a bounce.
The widely followed Biotechnology Index
(
BTK |
Quote |
Chart |
News |
PowerRating) bounced off a long-term
trendline. I have found that trendlines extending back a year or more tend to
produce consistent bounces.Â
Tomorrow evening after the turkey is basted, I’ll be looking for it to eventually
come out of the oven. Similarly, I believe that market is due to come out of the
oven, at least for a little while.
Best wishes to you and your families,