Put Your Helmet On

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 markets opening. Therefore, overnight events may alter the outcome of
these observations.

On Tuesday, the Nasdaq didn’t do much–it chopped within a
narrow range.

 

The S&P failed to follow
through.

 

 

Tonight (Tuesday), we have 7,
count them, 7 arrows pointing down on the Market
Bias Page. Combine this with a one-day old TRIN Reversal sell signal and an
overbought McClellean Oscillator and it suggests that we are headed lower
over the next few days. 

Notice I use the word suggests. No matter what
anyone tells you, nothing is sure fire. All it would take is some buyers to come
into the market to make it go higher. And, no one has control over the millions
of the market’s participants. However, these systems, in historical backtesting,
have shown a statistical edge. 

So what do we do? True, the blue arrow still points up but
you can’t completely ignore the above. Therefore, if you really want to play,
you might look to nibble on the short side (maybe play the Spyders (SPY)
or Q’s (QQQ)?).
However, don’t fight the tape. Me? I think I’m going to sit this one out and
wait for things to set up again.

Looking to potential setups, Sigma Aldrich (SIAL),
mentioned Monday night and on the  Pullbacks
Off Highs List, still looks like it has the potential to rally out of a
Running Cup and Handle. Just wait for follow through to the upside (i.e. No
Tickee, No Tradee) as it did close poorly on Tuesday. ^ 

 

Astropower (APWR)
looks poised to resume its strong uptrend.

On the short side, Cablevision (CVC),
mentioned Tuesday night and on the Pullbacks
Off Lows List, still looks vulnerable.

Walk Through (cont.)

As you know, lately we have been walking through a position
in RF Micro Devices (RFMD).
You might want to look at the recent archives (on the right side of this page)
before continuing. On Monday, we had ratcheted our stop up below the day’s low.
We also discussed the fact that on such a large move, more or all of the profits
could have been taken.* Tuesday’s reversal is a little troublesome but our stop
was not hit. Therefore, we’ll leave the stop where it is. This now becomes a
two-bar low stop. For general guidelines on how to enter and manage positions,
see my articles on Money
Management under Trading Lessons.

 

Best of luck with your trading
on Wednesday! 

Dave
Landry

P.S. Reminder: Protective stops on every trade!

*Also, don’t forget about what the overall market
and sector is doing when considering how to manage the position. For more
information on this, see my latest article Beyond
The Setup.  

“…Recently
I made a smart decision and purchased your book.  I was encouraged and
learned a great deal…..The most important chapter to me was how you prepare to
trade.  The right mindset is as important as finding the setup…..(I’m in
the trading business with a good friend of mine)…We are both relatively
youthful at 25 and have soaked your book into our daily routines. I thank
you for sharing your experiences and your tremendous insight.  It is
individuals like yourself that help make my friend and I better traders as

  

No risk, 30-day, money
back guarantee.