Mixed Feelings
On Thursday, the Nasdaq open flat and briefly sold off.
After chopping around and testing its lows once again, it rallied nicely and
closed well. This action puts it right up against its 50-day moving average.
Although it didn’t gain much on the day, the S&P put in
a very impressive performance. It tailed lower but reversed to close well. This
action suggests it has the potential to challenge the top of its recent range,
which also corresponds with major resistance.
The VIX dropped to multi-year lows and is beginning to get somewhat
stretched away from its 10-day moving average.
So what do we do? I actually like the price action in the
indices. However, I can’t completely ignore the action in the VIX. Therefore,
look to play both sides. On the long side stick with issues that have recently
pulled back from strong trends. The banks are a good example here.
Looking to potential setups, Regions Financial Corp.
(
RGBK |
Quote |
Chart |
News |
PowerRating) looks like it has the potential to resume its uptrend out of a
pullback.
Let’s Look At One That Did NOT Work
In general, there’s not much to discuss on a setup that
does not work. You place your stop and if you get stopped out, you shrug your
shoulders and move on. It is a passive process. On the other hand,
managing a winning trade is an active process (e.g., trailing stops,
taking partial profits etc..). OK, I admit it, it’s a lot more fun to talk about
the winners. Where was I? Oh, a losing trade. Lear
(
LEA |
Quote |
Chart |
News |
PowerRating) was mentioned
recently as a pullback (a). The stock triggered by trading above the prior day’s
high (b). I mentioned the stock again, even though it didn’t initial work. Why?
Because stocks often take off after an initial false move (this is the basis of
my false move strategies). Unfortunately, the stock sold off hard on Tuesday.
Therefore, the stop, which should have been placed below the recent lows (d) was
taken out. For more on how to manage your trades, see my articles
under TM
University (well worth the price of tuition!).
Best of luck with
your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…I enjoyed your book very much! I’ve read plenty over the last 15 years. You use the KISS
method, keep it simple stupid, which is great! I do not want to over complicate trading.
Keep it simple and go with the trend.
THANKS!….”
Bill B.
No risk,
30-day, money back guarantee.