Pay Attention When Bullish Patterns Fail
I’m Dave Landry and I approved this column.Â
On Thursday, the Nasdaq sold off in early trading. It found
its morning low fairly quickly and worked its way sideways to higher until early
afternoon. It then began to sell off. This selling accelerated going into the
close. This action has it closing poorly and puts it below its 50-day and (just
below) its 200-day moving averages.Â
The S&P put in a similar performance. It too closed
poorly. It is now back below its 50-day moving
average.Â
So what do we do? Thursday’s weakness puts
some sectors that were improving back into the questionable column. For
instance, in the semis, notice below how the moving averages came together and
crossed over to upside. This action created a bullish pattern that I call a
“Bow Tie” (as usual, shoot me an email if you need
rules for this or any pattern mentioned in this column). However, notice how the
sector sold off to close below all three of these averages to negate this
potentially positive pattern. This is par for the course with this market.Â
Therefore, considering this and recent lack of momentum (overall), I still think
the best course of action is no action.
Let’s hope that Friday’s Employment Report can tip the
scales–one way or the other.Â
There remains very few meaningful setups. As you’ve heard
me preach in the past, this is usually a sign to wait for better times.
Therefore, I am not showing any setups tonight (Thursday).Â
Best of luck with your trading on
Thursday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
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