Really Really
On Friday, the Nasdaq opened lower but quickly began to
work its way higher. However, it found its high early and generally worked it
way lower throughout the day. The selling accelerated going into the close and
has the index closing poorly.
The S&P also sold off to close poorly.
The VIX is once again stretched away from its 10-day moving
average. Once again, this action suggests the market has the potential to
bounce.
So what do we do? Well, it’s “really really” too
late to establish new shorts. See last night’s commentary for my canned oversold
speech (I’ll spare you longer-term readers). As usual, when faced with this
situation, probably the best thing to do is to continue to scale out and/or trail a stop on
existing shorts.
Based on the above, I am not showing any setups tonight.
For the nimble only (i.e., daytraders), look to play a reversal in the Q’s (or
SPY’s) should they gap lower on Monday.
The Holy Grail
In my recent Trader
Talk I said: “BTW, you want the holy grail? Only trade when the sectors
are setup…….you will thank me for that one.” Well, Friday was a good
example of this* (note: if you haven’t already done so, see Thursday’s
commentary). Notice the AMEX Oil Service Index
(
$OSX.X |
Quote |
Chart |
News |
PowerRating), which was setup
as a pullback from lows, sold off hard on Friday. Baker Hughes
(
BHI |
Quote |
Chart |
News |
PowerRating),
mentioned Thursday night, also sold off hard (as did many other oil service
stocks that were setup as pullbacks from lows). Check out Trader
Talk this weekend. In it I really stressed the importance of sector action
and how to find the best sectors. Then, feel free to email me if you have any
questions. I’ll be on the sailboat for most of the weekend but will check in
before Monday.
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*If you would like another example of the above, I can
send you the archive from Friday’s trading service. In it, I discussed how
the Defense Stocks
(
$DFI.X |
Quote |
Chart |
News |
PowerRating) were set up and showed Lockheed Martin
(
LMT |
Quote |
Chart |
News |
PowerRating) as an example.
“……….I have read your book over a dozen times and I am still learning new things. Thanks for making me realize that I am a “method” man and I have since changed my ways increasing my success greatly….Thank you again for writing a terrific book….”
Anthony P.
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