Off To The Races, NOT!
On Wednesday, the Nasdaq lapped higher and
appeared to be off to the races. However, by mid day it formed a
double top and sold off–hard. High to low it dropped well over 2%.
This action is disappointing, as those who were
given the "all clear" at new highs are now holding on to
losing positions.
The S&P also sold off after an earlier rally.
So what do we do? The
fact that tech made such a major reversal is concerning. I guess the
song remains the same: Look to tighten stops on existing longs, take
some profits if you have them and look to fire off a short or two
until this correction plays out. One last point, stocks closed so
poorly we could get a "pop down" opening followed by an
early reversal. Therefore, you might want to wait a few minutes before
establishing new positions.
Looking to potential
setups, Abgenix (ABGX),
in the weak biotechs, looks poised to continue its rollover out of a
Bow Tie. This is especially true if it takes out Tuesday’s pivot low
(a).
Smoke ‘Em If You
Got ‘Em
Mentor Graphics (MENT),
mentioned last week as a pullback (see archives), is now up sharply
(a) since then. When blessed with such a quick profit, make sure you
lock in a piece and trail a stop. See my articles under Money
Management for more on this subject.
Best of luck with
your trading on Thursday!
Dave
Landry
P.S. Reminder: Protective stops on
every trade!
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