More On Why I Think The Upside Could Be Limited
On Monday, the Nasdaq opened firmer but quickly found its
high and began to sell off. Then after chopping sideways throughout mid-day, it
resumed its sell off in early afternoon trading. Finally, it chopped sideways going
into the close.
This action has it stalling short of shorter-term and
longer-term resistance.
The S&P put in a similar performance.
This action puts it back to near its 50-day moving average
and also keeps it below shorter-term and longer-term resistance.
So what do we do? Nothing much has changed.
There remains a
tremendous amount of overhead resistance in the indices. And, so far, they have stalled
short of it. Therefore, as mentioned recently, I still think the upside could be
limited. The
other thing that concerns me is the fact that the major indices have essentially
gone nowhere in almost a month. Obviously, this doesn’t bode well for
the momentum based trader. Considering the above, on the long side, continue to trade
at a reduced size. On the short side, continue watching interest sensitive
issues that have recently pulled back from their sharp downtrends (e.g.
homebuilders, banks, etc…) Also, continue to watch other sectors in strong downtrends
such as metals & mining.
As far as setups, Newmont Mining
(
NEM |
Quote |
Chart |
News |
PowerRating), in the weak
gold sector, looks poised to resume its recent sharp slide out of a
pullback.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
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