Morons 2, Bottom Pickers 0
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
markets opening. Therefore, overnight events may alter the
outcome of these observations.
What
can I say? On Friday, the Nasdaq gapped lower (a) and closed on its low (b).
For those
keeping score, this is the lowest close since December of 1998.
When I look at the VIX, I see
that it was higher on Friday (a) but nowhere near the levels that one would
expect at a panic market bottom. Based on this, I still think we have a ways to
go.
So what do we do? Even though I don’t think its over, I think its too late to
establish new shorts. Therefore, I’d continue to lock in partial profits on existing short
positions that we built over the last few days and then wait for the next opportunities
to set up.
Should you attempt to establish new positions, Horizon
Offshore
(
HOFF |
Quote |
Chart |
News |
PowerRating) is in its first pullback since breaking out of a high level
micro cup and handle.
On the short side, Vitesse Semiconductor
(
VTSS |
Quote |
Chart |
News |
PowerRating), on Pullbacks
Off Lows List, was able to rally off its lows on Friday but still looks like
it has the potential to resume its longer-term downtrend out of a loosely formed
inverted cup and handle.
Other
As you know, from time to time, someone occasionally takes
a shot at me. Based on the recent “moron” remarks, many of you have
come to my defense. Thanks! He’s my favorite from today:
Special thanks to an ‘ol
trend following moron for the nice profits from my VSTR and broker-dealer
shorts.
You know, I’d never shorted a stock before I started studying
Tradingmarkets.com. And, I have to say, it’s an amazing feeling to go through a
day like today making money instead of bailing and cowering.
All the best,
Chris D.
These comments give me a good path to this weekend’s article:
Shorting Stocks: The
Art of Playing Both Sides of the Market. This is a “new and
improved” version of one of my first articles ever written for
TradingMarkets (back when we were Trade Hard). I revamped this article based on
the recent peak in interest shorting stocks.
BTW, this peak is
probably a signal that the market is near a bottom. However, even if it is, I
can assure you that there will be bear markets in the future and even the best bull
markets have corrections. Therefore, if you want to make a long-term living
trading stocks, you must know how to short stocks.
Best
of luck with your trading on Monday!
P.S. Reminder:
Protective stops on every trade!
“....Hey,
for a moron, you write a good book……..”
Cliff C.
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