Sectors That Look Vulnerable

On Thursday, the Nasdaq opened flat and initially chopped
sideways but soon began to sell off. Then
after some afternoon drifting, it resumed its slide. This action has it
closing poorly and suggests that it has the potential to take out the 1320
support level.

The S&P put in a somewhat similar performance. This
action has it closing poorly. Once again, it remains below
its 870
“breakdown” level. The October lows remain a potential target here.

So what do we do? There are a plethora of stocks setting up
on the short side coming from a broad variety of sectors. These sectors include
(but are not limited to): defense, insurance, retail, major drugs, major oils
and utilities. Under an ideal situation, the market would have rallied for
a few days. This would have walked off the oversold condition and stacked the
odds in our favor for a rollover from higher a level. Well, as you know, the
market seldom accommodates. Considering the above, focus on the short side but
don’t load the boat, since we remain oversold and in an event-driven environment.

Looking to potential setups, Newmont Mining
Quote |
Chart |
News |
mentioned recently, still looks like it has the potential to resume is uptrend
out of a high-level cup and handle.

General Dynamics
GD |
Quote |
Chart |
News |
, mentioned recently and in the
weak defense sector, still looks poised to resume its meltdown.

Best of luck with your trading on Friday!

Dave Landry

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

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