Not Baaaaad
On Monday, the Nasdaq lapped lower and initially fell.
However, it quickly found its low and rallied for a solid trend day
higher. This action forms an outside day and puts the index above its
50-day and near its 200-day moving average.
The S&P also reversed after tailing lower. This action
keeps it above its 50-day and 200-day moving averages.
The VIX gapped higher on the early morning selling. This
action puts it back at its 10-day moving average.Â
So what do we do? The fact that the VIX got back to its
10-day moving average suggests that the volatility may be making a shift towards
lower levels. This could suggests that the correction may be behind us.
However, I think it’s too difficult to call, especially with many sectors
forming tops. In light of these mixed signals, I think the best thing to do is
to continue to keep it light.Â
 Looking to potential setups, it appears that the homebuilders,
mentioned recently, have topped. Therefore, an ancillary play may be in the
title insurance companies. With that said, Ambac
(
ABK |
Quote |
Chart |
News |
PowerRating) looks poised to
continue its rollover. One last point, notice how the last down thrust was out
of a Bow Tie “Kiss” pattern. For more on this, see my articles under
TM University.Â
Other
With a heavy heart, I’m sad to announce that tonight
(04/01/2002) will be my last column. I’m leaving the trading world to fill my
lifelong dream of becoming a sheep farmer.
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…….excellent….I enjoyed the chapter on trader’s psychology…..”Â
Ricardo A.
PortugalÂ
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