More On What To Do In An Oversold Environment
On Tuesday, the Nasdaq opened firmer but quickly found its
high and began to sell off. It bounced slightly around mid-day but sold off
again in afternoon trading. It found its low late in the day and rallied going
into the close. This action puts it slightly in the plus column.
Once again, the 200-day
moving average, circa 1850, could be the next
stop here.Â
The S&P put in a somewhat similar performance but was
stronger on both a relative and absolute basis.Â
Once again, the 200-day moving average could be the next stop
here too.
So what do we do? I’m having a hard time
getting excited about this market. It remains too oversold to initiate any new
shorts. This doesn’t really matter though since there really aren’t that many
setting up anyway. This is due to the fact that the methodology requires a
pullback. On the long side, there really isn’t too much to get excited about
either. About the only areas still in trends are selected health services (e.g.
HMOs), restaurants, and the homebuilders. Considering the above, the best course
of action may be no action, at least until we see a meaningful pullback.
No setups tonight.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
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