Play The Bounce Or Look To Short?
Looking to the indices, on Monday, the Nasdaq opened firmer
but quickly began to sell off. However, it found its low by mid-morning and
generally worked its way higher throughout the rest of the day. This action has
it reversing right at its 50-day moving average and closing well.
The S&P put in a similar performance but wasn’t as
impressive as the Nasdaq. This action has it also closing well. It also puts it
back above its 50-day moving
average.
So what do we do? It looks like we are
in bounce from oversold mode. This makes sense based on recent low
advance/decline readings, the action in the VIX, and the oversold nature of price itself. Also, today
(Monday) I have buys in my Oscillator Swing System and Trin Reversal
System (as usual, email me if you need rules). So, there exists the
possibility that we could see additional follow through to the upside. If you took
recent index trades, you might want to look to scale out should this occur. On the short side, begin looking for opportunities in those areas that
are pulling back from their recent sharp sell offs.
Looking to potential setups, Northrop Grumman
(
NOC |
Quote |
Chart |
News |
PowerRating), in
the weak defense sector (a), looks poised to resume its meltdown out of a
pullback.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….your book is like an investing bible to me, and I thank you very much for writing in a simple straight forward style that even a novice like me can use….”
Thanks Much,
Cliff A.
