Mash The Gophers In The Head
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.
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On
Friday, the Nasdaq lapped lower on the rotten Apple news(a). This turned out to
be the near the exact highs as the index sold off to close poorly (b). The
fact that it didn’t take out 3600 is somewhat of a positive but that’s
just looking for good in the bad.Â
Friday’s
action closes the month out as the worst September in twenty years.*
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As I’ve mentioned
recently, 3600 still remains near-term support. After that, likely targets are
the August lows (c) followed by re-test of the June lows (d).
This market reminds me of that arcade game
where you have to mash the gophers in the head with a hammer. It seems
like every time the market tries to pop up it gets smacked with some bad
news.Â
So what do we do? Continue to look for
opportunities on both sides. As long as things remain vulnerable, defensive
groups such as the drugs
(
$DRG.X |
Quote |
Chart |
News |
PowerRating) might be your best play on the long
side. And, as I’ve been preaching, there’s no need to bet the farm until
things improve.
Looking
to potential setups, Allergan
(
AGN |
Quote |
Chart |
News |
PowerRating), mentioned Thursday night and on the Pullbacks
Off Highs List, is now a pattern I call a Trend Pivot (false rally)
Pullback. This is where a stock begins to rally out of a pullback but fails. The
theory is that this draws in and subsequently shakes out the “fast
money”. This action often clears the way for a stock to trade higher,
especially if it can take out the pivot high (a).
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Continuing on the drug/heathcare theme, St.
Jude Medical
(
STJ |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks like it has the
potential to rally out of a flag.
Lanoptics
(
LNOP |
Quote |
Chart |
News |
PowerRating), one of the few bright
spots in technology, has formed a two-step pullback.
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On the short side, SCI
Systems
(
SCI |
Quote |
Chart |
News |
PowerRating), mentioned Thursday night, still looks vulnerable.
BTW, for those looking for more shorts, be
patient. As soon as we can get a rally from lows, we’ll have plenty of setups.
Best
of luck with your trading on Monday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
*Source: CNBC.