No Tickee, No Tradee
On Monday, the Nasdaq lapped down and headed lower for most
of the morning. It then found its low late in the afternoon and began to rally.
However, this wasn’t enough to keep it from closing poorly.
It still looks like the 50-day moving average and the
bottom of its recent trading range, circa 2100, will likely be challenged.
The S&P still looks like it
has the potential to sell off out of a head and shoulders top. Watch the 50-day moving
average and 1240 for possible support. Should that get taken out, 1200 may be
the next level of support.
The VIX reversed (a) after
trading higher creating a CVR I buy signal. However, I would much prefer this
signal to occur during an overbought VIX (e.g. a CVR III/CVR III Modified)
versus the indicator being at such low levels.
So what do we do? There’s no need to be a hero and fight
the tape. Continue to watch strong stocks that are undergoing corrections
and wait for entries (see below). The biotechs
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) continue to be
the most interesting here.Â
Celgene
(
CELG |
Quote |
Chart |
News |
PowerRating), mentioned
Friday and on the Pullbacks
Off Highs List, still looks like it has the potential to resume its strong
uptrend out of a pullback.
Protein Design Labs
(
PDLI |
Quote |
Chart |
News |
PowerRating), mentioned Friday, has pulled back to the area of its recent
breakout. It should find support somewhere in this area. Otherwise, avoid this
stock. One last point, for the nimble (e.g. a day trade), you might look to play
a reversal (with a tight stop) if it gaps down and then reverses intra-day. For
all others, wait for an entry (see below).
No
Tickee, No Tradee
Today’s poster child for
waiting for entries is Enzon
(
ENZN |
Quote |
Chart |
News |
PowerRating). The stock gapped sharply lower on the
open. Fortunately, it did not trigger an entry. Affymetrix
(
AFFX |
Quote |
Chart |
News |
PowerRating) and the
biotechs mentioned above also provided good examples of why you should wait for
entries.
Other
On a serious note, my prayers and best wishes goes out to
my friends in Houston and my neighbors in nearby New Orleans. I hope you guys
are able to dry out soon!
Best of luck with
your trading on Tuesday!
P.S. Reminder: Protective stops on
every trade!
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help swing traders. I really appreciated your market analysis process….”
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