Possible Breakdown From Trading Range
On Tuesday, the Nasdaq initially popped higher on the Iraqi
news, but reversed in early trading. Then after chopping around, it resumed its selloff.
The S&P also ended lower after trading higher.
So what do we do? The Dow took out the bottom of its recent
trading range and the S&P and Nasdaq both look poised to take out the bottom
of their recent ranges. This action suggests that we can get slightly more
aggressive in the direction of the big blue arrow in anticipation of a break
down. With that said, the banks appear to be continuing their rollover, as do the
utilities. Therefore, look for shorting opportunities here.
Looking to potential setups, PPL Corp.*
(
PPL |
Quote |
Chart |
News |
PowerRating), in the
aforementioned weak utilities, looks poised to continue its rollover out
of a Bow Tie.
Random Thoughts
Please tell me that you didn’t “buy” the Iraqi
news. I know you are smart enough not be drawn into that type of trap. If
you are new to trading, watch out for these euphoric “news type”
openings. More-often-than-not, they end with a reversal. At the least, let
stocks trade for a few minutes before acting on this “big up” (or
down) opening.
FYI, as you look through your charts tonight, notice
how many stocks opened at or very near their highs.
Best of luck with
your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*Full disclosure: I do have a small position
here.