No Trades No Loss
As
traders we must endure a great deal day in and day out.
Today
was the weakening of the U.S. dollar against the Euro and Yen. Thanks
to the IMF who
said the dollar could face a steep devaluation due to the large
current-account deficit. Not a nice thing to say,
especially if we as a country are looking for some economic recovery.
Furthermore,
no support was provided by Treasury Secretary O’Neill, after his
interview on CNBC.
The Nasdaq is definitely
poised to test the lows it made in April after closing below its
support level of 1935. So what should we do? Well you know the saying
cash is good. Not many stocks are coming up that meet our criteria (as
you can tell by my commentary) so no trading means no money lost. And
if you do trade, then take some profits off the table and always use a
stop!
Last week I mentioned
Medical Action (MDCI)
which was trading in a high level ascending triangle. Today it broke
out on very good volume and closed strong.
Trigon Health (TGH)
is in the midst of forming a handle for a multi–month
cup. The stock although is not showing the ideal growth we usually
look for, is still showing some good momentum on good volume. The HMO
is showing some constructive fundamentals as well.
Retailer Hott Topic (HOTT)
looks poised to testing its pivot point of a multi week "W"
shaped bottom.
Energy funds took the lead
among Electronically Traded Funds, the Oil Services HOLDRs
(OIH)
moved higher 7.3% in the session as did the Ishare DJ US Energy Sector
fund (IYE)
which gained 3.0%.
Also higher was the Energy
Select fund (XLE)
which surged up 1.5%.
Leading the sector funds
down was the Internet Infrastructure HOLDRs
(IIH)
which slid 5.3%.
The B2B HOLDRs
(BHH)
closed lower by 4.7%
And the Broadband HOLDRs
(BDH)
fell 4.5%. Note that the Williams Acc/Dis line made a new low (as well
as the Acc/Dis and OBV not shown). The fund still looks vulnerable to
the down side as it closed at support.
Remember that all securities
are risky. In any trade, you should always reduce your risk by
adjusting position size and placing open protective stops where
you will sell your long or cover your short in case the market turns
against you. For an introduction to combining price stops with
position sizing, see Loren’s lesson, Risky
Business.
Greg