Mixed Signals That I’m Watching
Looking to the indices, on Wednesday, the Nasdaq opened
weaker and after briefly chopping around, began to sell off. It found its low
fairly early and then began to work its way higher. However, it reversed late in
the day and sold off going into the close.
This action has it closing poorly, below the low of its
recent trading range, and further below its 50-day moving average. It also
has the index looking “toppy”.
The S&P put in a similar performance but managed to
close in the plus column.
This action keeps it below its recent trading
range and below its 50-day moving average. This trading range is now overhead
resistance. Â
So what do we do? Tonight (Wednesday) I
have mixed feelings towards the market. As implied above, the indices are
beginning to look like they are forming tops. At the least, they certainly have
lost a lot of their momentum. Further, the sector action overall remains
questionable with many areas in either downtrends or appear to be forming tops.
These include (but not limited to) finance in general, homebuilders, software,
Internet, selected insurance, utilities, and energy related stocks. On the other
hand, the VIX did reverse after tailing higher. This action creates repeat CVR
buy signals in an oversold environment. In other words, the potential for a
bounce. I suppose if I had to make a decision, I would still look to focus on
the short side. However, in light of such mixed signals, you might want to to
keep positions small and wait
for entries.Â
Looking to potential setups, Patterson Energy
(
PTEN |
Quote |
Chart |
News |
PowerRating),
mentioned recently and in the weak Oil & Gas Drillers (the green line
below), still looks like it has the potential to
resume its downtrend out of a Trend Pivot Pullback (email me if you need the
rules).
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…..And speaking of your book and articles, I have learned more from you than any other traders I have studied thru the years. Your writing is so easy to understand. And your setups actually make money!! I use your trend qualifiers, simple pullbacks, TKOs, trend pivot
pullbacks, and bow ties to trade the futures markets……. I’ve had your book for almost a year, and I still read it often.
….”
Lin S.Â
