One Step Closer
On Monday, the Nasdaq gapped lower and continued lower
throughout the morning. Then, after a failed rally attempt, it resumed its sell
off. It did try to rally going into the close but sold off again late in the
day. This action has it closing at fresh 6-year lows.
The S&P also sold off fairly hard but managed to end
off its worst levels.
So what do we do? The “even more” oversold
nature of the market combined with recent buy signals suggests that we are
getting closer to a bounce. However, like life, there are no guarantees in
trading. Therefore, tread lightly and use caution. For the aggressive, look to
play an early morning reversal in the index shares should they show signs of
reversing in early trading (e.g., a gap lower followed by a rally). On the short
side, I think I’d avoid initiating any new positions and concentrate on managing
the ones you already have. If you must short, then focus on issues that have
corrected ahead of this sell off or those such as the banks which have begun to
bounce.
Looking to potential setups, Golden West Financial
(
GDW |
Quote |
Chart |
News |
PowerRating)
( mentioned Friday), like the rest of the group, still looks poised to continue its downtrend out of a Bow Tie.
Keep On Smoking
Varian Semiconductor
(
VSEA |
Quote |
Chart |
News |
PowerRating) continues to move strongly
to the downside since first mentioned (a). When blessed with such nice/quick
profits, make sure you lock in a piece. For those new to my style/column, on
Tuesday I’ll discuss potential trailing stop techniques.
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“Your trading method is the best overall method that I have found in all the trading books that I’ve
read……..I actively mentor junior traders using your method…..”
Rick DiGiovanni
RedWood Trading, LLC
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