More Reasons Why You Should Continue To Sit On Your Hands
On Monday, the Nasdaq gapped sharply higher on the open but
found its high fairly quickly and began to sell off. Then, after drifting
sideways for much of the day, it began to sell off again, but this time in
earnest. This action has it closing poorly and gives back nearly all of its
earlier gains. It also has it stalling at its March highs.
The S&P also sold off to close poorly after approaching
its March highs.
So what do we do? The fact that the the indices reversed
after tagging their March highs is concerning. And, as one would expect, this
action has many sectors stalling out too (see Friday’s commentary for more of my
thoughts on the sectors). Further, there were virtually no meaningful setups
generated by my scans. Therefore, I see no reason to take on new positions. This
is especially true when you combine the above with the fact that we remain in
an event-driven environment.
Not setups tonight.
Lesson Of The Day: Smoke ’em If You Got ’em
Whenever you see the futures up sharply overnight,
especially in an event-driven environment, the first thing you should be
thinking is “will it stick?” And many times (especially in more recent
times), it doesn’t. Therefore, if you are blessed with nice profits, take
some off the table* and tighten your stop to breakeven on the rest.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*Or, trail a tight stop on a portion intra-day.
See my articles “Adding A Layer Of Discretion To Your Swing Trades”,
“Opening Gaps: Fade ’em, Trade ’em or Ignore ’em”, and those relating
to money management/position management for more on this subject. Or, (even
better), go to www.tradersgalleria.com
and buy all the stuff with my name on it.
“….I’ve just finished to reading your book and LET ME TELL YOU IT’S GREAT!!!
RT
Italy
