More On How To Stack The Odds in Your Favor…
More On How To Stack The Odds In Your Favor
On 08/02/04, I wrote about stacking the odds in your favor by trading
in the direction of the market, sector, and stock. On that date, all three were
trending lower and set up.
Here are the charts from that column:
The Nasdaq was trending lower and set up as a pullback from
lows:
The Semiconductor Index was trending lower and set up as a
pullback from lows:
And Cymer
(
CYMI |
Quote |
Chart |
News |
PowerRating), a semi, was also trending lower and
set up as a pullback from lows.
Fast forwarding to today, we see that…
The Nasdaq resumed its downtrend.
The sector resumed its downtrend:
And, the stock itself moved nicely lower:
By putting all three pieces together: Market, Sector, and Individual stock,
you stack the odds in your favor. Obviously it doesn’t always work this well,
but as you can see, it pays nicely when it does.
One again, as mentioned recently: If you’re new to momentum based swing trading and would like more information on the basics such as trend, entries, and money management, email me and I’ll be happy to send you* the primer section from my second
book.
On Wednesday, the Nasdaq gapped lower and initially
continued lower but found its low in early trading and began to rally. Then,
after trading back and forth, it rallied again going into the close (see chart
above).
The S&P also rallied after an early morning sell off.
So what do we do?
Nothing has really changed:
so far, the big blue arrows
still point down for the indices, the majority of the sectors, and the majority
of stocks themselves. Even previous leaders such as the energy stocks continue
to break down. Therefore, continue to focus on the short side. On existing
positions, make sure you are taking partial profits and trailing stops
lower.
As far as setups, Gen Probe
(
GPRO |
Quote |
Chart |
News |
PowerRating) looks poised to
resume its downtrend out of a pullback. Use caution though, since this one can
be volatile.
Email Of The Day
Hello!!!!!!!!!
All the stocks are falling. Not just one or two. My 6yr. old could have done
that article.
Have
him (her) send me a resume. He (she) sounds like he (she) has what it takes to recognize trends.
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S.
Learn my newest and most advanced version of my Bow Ties Strategy.
Click here for details.
*For those waiting for a reply, I
hope to catch up soon. Some request from Hotmail accounts are getting
bounced–try again with another account if it did not come through (FYI, Yahoo!
accounts seem work very well with attachments).