Squeeze?
On Wednesday, the Nasdaq opened lower but began to work its
way higher. However, it quickly found its morning high and sold off to make new
lows. By mid-day, it reversed again and began to rally. After a late-afternoon
pullback, it then rallied to close on its high. In other words, it was pretty
much all over the place but tested its lows and reversed to close well.
The S&P also reversed after hitting new multi-month
lows.
So what do we do? I’m not crazy about the breadth numbers
but, based on price (especially late-day action), it appears that we are in
bounce mode–or should I say “squeeze” mode? However, this, in
and of itself isn’t reason enough for me to get bullish. Play the bounce if you
are aggressive and nimble, not because you are looking for action. For everyone
else, I think the best plan of action would be to wait to see how it will play
out. If it begins to stall over the next few days, we should see numerous stocks
setting up on the short side.
No setups tonight. Wait for the situation to develop.
Other
Today, I spoke with several traders who I respect (before
the afternoon rally). We all
agreed that we are not fighting the trend but we are gritting our teeth, knowing
that the potential for the mother-of-all short squeezes exists.
Some Replies To Tuesday’s Email Of The Day (I haven’t
got around to reading/responding to all, but will)
Hi, Dave.
Those of us who admire you hope you don’t abandon your excellent and helpful column knowing you have to endure emails like the one yesterday
from the frustrated gentlemen who abused you. It’s not your fault that
you happen to be right most of the time!
I read you every day and continue to find your commentary insightful,
clear and humble. I especially appreciate the simplicity of your approach. Of course, when you make clear statements, it’s a lot easier
to tell when you make a mistake, unlike some of your colleagues who trade 20 different scenarios in a dozen different time frames. They can
always find SOMETHING to be right about. Thanks for your calm and rational perspective. You da man.
Neal
PS Yes, I already have your book.
Dave:
After reading the email you received and posted today, I just had to write. As an optimist, and I think most of us are, I too hate the Big Blue Arrows.
I would like nothing more than to buy good stocks, have them go up and sell them to the next guy that wants to own good stocks, have them go up and sell
them to the next guy, ad infinitum. Unfortunately, that’s not where the money’s in stocks the last couple of years. Before subscribing to TM I was
getting my head, torso, ass and both feet handed to me going long. Then I
subscribed to TM and I found you, Haggo, LC, Carolyn, and Goran (remember him). I learned to short the market and I put a big blue arrow above my
computer screen, with the message that you suggested a long time back. It says “We are still in a bear market.” I also added “So be a Trend Following
Moron until things change.” Until the Big Blue Arrow starts pointing in the other direction we need guys like Harold to keep loaning us his stock.
Bill M. , BS, MBA and most important TFM.
Thanks for sharing that email. It made my day. Human nature cracks me up.
Peter M.
My hate mail is at an all time high now. The power of the Net to give voice to the voiceless (and the idiots ;-)
Alan Farley
Editor/Publisher
Hard Right Edge
You really kill me. I am so glad you have the “nerve” to reprint that email. That is really worth a hearty laugh.
I guess it isn’t politically correct to short the market. Gee, I guess we have been soooo bad.
Let me guess….Dave, in your years of trading, have you ever had your head handed to you? I would guess that has happened more than once…..That is just my opinion….I could be wrong.
Harold, I hope that makes you feel better.
Richard D.
Dave,
I could not stop laughing after reading the Email of the Day. I swing trade, practice money management and I see no
brainers and trade them. I guess another chowder-head out there who can read the charts and believe what’s going on. Maybe he ought to play VCR Taped reruns of Maria Bartiromo lustfully saying “The Market is On Fire Again….The
Nasdaq has hit 4500 for an all time high” on CNBC to feel better because if he can’t see it we are in the midst of the worst bear since 74 and the weakest period maybe since 1929-1932 in terms of overall market percentage losses.
But then again the great part about our country and trading is everyone has an opinion and money to play with; it just seems as if Harold will be without some of his money but with
a lot of opinions as this market wears on.
Take care.
Matt M.
Totally unbelievable the way Mr. Fink (is that his real name? no wonder he’s in such a bad mood) responds to your daily updates. I’m a money manager with over 30 million in assets under management and I find your column extremely helpful. Keep up the good work Dave!!
WRB
Mr. Landry,
You have to be kidding! How many of these do you regularly get? This guy isn’t going through a drawdown he’s going through a BREAKDOWN.
Ben
After reading your email of the day. {wow is he getting burned} I just have to let you know that you have taught me
a lot Dave. And I love the big blue arrows. It sure is a good feeling knowing I have stayed alive during this bear
market… and without your teaching I would be just another statistic…keep up the good work thanks and don’t stop using the big blue arrows.
Kent A.
Dave,
Don’t worry-most of us still love your column. sounds like that young man
needs Jesus in his life!
AC
Thanks for posting the good and the bad e-mails that you get, I learn a lot from them. It takes objectiveness and a level head to not be thrown off by
comments such as below. This is a tough market and experience has shown that those who keep their composure like yourself live to trade another day.
As always thanks for the insights. They’ve helped me become a better
trader.
PS. the big blue arrows have saved me a lot of big green bills :)
Best wishes,
Fred B.
Frankly I find the arrows to be a pointed reminder of the proper trade direction. Makes me quiver whenever I see them!
David F.
Holy “Finkasaurus” Batman! I think a time-out is in order here. Man this guy has some issues! I, however, have learned mucho lessons from you, Dave. STOPS on everything, when in doubt – stay out, let the
market lead you instead of vice versa. However, a quote from Ben Franklin really
sums up my trading…..”I have not failed. I have found 10,000 ways that don’t work.” You crack me up, Dave. Your subtlety and blue arrows are what we need during this time….no need to take things so seriously. And if you
do, it’s you own “f***king” fault! Get over yourself and your losses !
Carson S.
Best of luck with
your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….I want to personally thank you for writing such a detailed and informative book.It has opened my eyes to a new world of trading…..”
MD
No risk,
30-day, money-back guarantee.