Once Again, The Trend IS Your Friend
On Friday, the Nasdaq opened slightly higher but
quickly sold off for a solid trend day lower. This action puts it just
about all the way back to Wednesday’s launch pad.
The S&P has now also given up nearly all of its recent
gains.
Now that the markets have given back nearly all of their
gains, I’m having a hard time not going after the bottom pickers. I suppose I’ll
resist the temptation though. They will be right, someday. And, I will be wrong,
guaranteed, when the bottom does finally come. For now though, I think I’ll just
keep trading in the direction of the big blue arrows.
So what do we do? The advantage of selling short is that
moves are often fast. The disadvantage of short selling is that the moves are
often fast — blink and you miss them. On Friday, technology (especially biotech,
semiconductors and software) was creamed. Now that all of these stocks have
quickly returned to their old lows, it’s difficult to find new shorts.
Therefore, you’re probably better off managing your existing shorts than looking
for new ones. On the long side, my commentary remains the same: Focus on issues
that have performed well lately (e.g., health services) or have the ability to trade contra
to the overall market (e.g., gold).
Looking to potential setups, Anthem
(
ATH |
Quote |
Chart |
News |
PowerRating), mentioned
recently and in strong health services–healthcare plans*, still looks like it has the potential to
resume its uptrend out of a pullback.
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*BTW, HMO stands for “hand money over”.
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