Oops!, I Did It Again
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
market’s opening. Therefore, overnight events may alter the
outcome of these observations.
As my neighbor Britney in nearby Kentwood, Louisiana says:
“Oops!, I did it again.” You see, many of my friends and family are salesmen.
This was yesterday’s conversation, but, almost always, it’s mostly the same:
(phone rings)
Me: Hello, Dave Landry.
Friends or Family (ForF): Hi Dave, it’s me.
Me: Hello you. What’s up?
ForF: Look, I’m in a client’s office. They are talking about buying XYZ. I told them who you
are….Would you mind giving them your opinion?
Me: Sure. (phone changes hands) Hello client!
The Client: I’m thinking about XYZ. What do you think?
Me: Let me see. Recently, it’s dropped from 80 down to 30. Hmmm, looks like a downtrend. I’d avoid it.
The Client: Well, isn’t it a bargain?
Me: Well, we’re in a bear market–the worst in history for the Nasdaq. Take Etoys for example, it was at 80 not too long ago. Now, it’s less than a quarter.
Take a “real company” like Xerox for example, it probably looked pretty good at 20 bucks. Now it’s less than $5. You know, trading is not rocket science. You buy things that are going up and avoid things that are going down. I often talk about how a 6-year old makes a better trader than us adults (click) Hello? Hello?
Later that day:
(phone rings)
Me: Hello, Dave Landry.
ForF: I can’t believe what an _____ (rhymes with mole) you are. These are my clients.Â
They want to give trading a try. Why do you have to be so negative, so
condescending!?!
Me: Because they never ask me about a stock that’s going up.
Everyone’s always trying to bottom
fish. I’m trying to save them from wasting money. Look at Etoys, it was at $80 it’s now 25
cents. Take a “real company” like Xerox for example, it probably looked pretty good at $20 now its
less than 5 bucks. You know my motto, ask a 6-year old which way a (click) hello? hello?
And now for something completely different.Â
I received an email Friday morning that asked me how I
would go about managing positions in Clorox
(
CLX |
Quote |
Chart |
News |
PowerRating) and Paychex
(
PAYX |
Quote |
Chart |
News |
PowerRating),
two shorts I mentioned Wednesday night for Thursday’s trading. The answer is, there is no
management of the position because neither one of them triggered on Thursday.
Notice below that both rallied (a) and did not trade below the entries. As
a reminder, always wait for follow-through in the direction of the potential trade. This
is normally the prior day’s high (or possibly two to three-bar high, depending
on the setup) for longs and below the prior low (or possibly two to three-bar
lows, depending on the setup) for short sales. Re-read Ten
Tenets Of Swing Trading (rule #2, “No Tickie, No Tradee”) for
more on entries and money management.
Back to the markets.
On Friday, the Nasdaq lapped higher on the open (a)
and mounted a decent
rally. Then, after some afternoon drifting, the index began to sell off. However, this
was met with eager buyers–enough to push it to close on its high
(b).Â
Upside volume
was very impressive for the day before a long holiday weekend.
So what do we do? Is
this THE low? I dunno and I don’t care. Picking bottoms is a loser’s game.
Coming into Friday, I had buys in the short-term market timing systems that I
follow, combined with multiple buy signals on the Market
Bias page. This suggested the potential for a bounce. And we
got a nice one. As always, follow-through will be key. The market still remains in a
longer-term downtrend. Therefore, we’ll take any more it will give us to
the upside through trailing stops and locking in profits. In the meantime, keep
an eye out for shorts for when the music stops.Â
Looking to potential
setups, Toll Bothers
(
TOL |
Quote |
Chart |
News |
PowerRating), mentioned recently, began rallying out of a “two-step”
pullback on Friday.
On the short side,
Abbot Labs
(
ABT |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Lows List and mentioned Thursday, still looks vulnerable.Â
Clorox
(
CLX |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks poised to
resume its meltdown.
Jabil Circuit
(
JBL |
Quote |
Chart |
News |
PowerRating), on the Proprietary
Implosion List, is in day two of a pullback from lows and looks poised to
resume its strong downtrend.
Best
of luck with your trading on Tuesday!Â
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
P.P.S. Happy Holiday!!!!!
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