Stay Defensive
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 opened lower and kept on going. It
did manage to stabilize and chop around early in the afternoon, but this wasn’t
enough to keep it from closing poorly.
Tuesday’s action has the NASDAQ probing below 2200–the top
of its recent range.
Unlike the NASDAQ which got
whacked for 3% plus, the S&P fared better as it
drifted into the top of its recent range.
So what do we do? Obviously, we’re not as overbought as we
have been in recent times. In fact, by some indicators, we are becoming
oversold. However, this isn’t reason in and of itself to run out and buy.
Therefore, I would focus on those sectors which have been or can trade contra to
the market. These include the biotechs
(
$BTK.X |
Quote |
Chart |
News |
PowerRating), drugs
(
$DRG.X |
Quote |
Chart |
News |
PowerRating)
and gold/silver
(
$XAU.X |
Quote |
Chart |
News |
PowerRating). Above all, don’t try to guess when we will turn
out of this correction, wait for follow through (no tickee, no tradee).
Looking to potential setups, Gilead Sciences
(
GILD |
Quote |
Chart |
News |
PowerRating),
mentioned recently and in the strong biotech sector, still looks like it
has the potential to resume its strong uptrend. Just wait for it to clear
Friday’s pivot high in case the rally out of the pullback turns out to be a
false one (this pattern is known as a Trend Pivot Pullback).
Human Genome Sciences
(
HGSI |
Quote |
Chart |
News |
PowerRating) looks like it has the
potential to resume its longer-term uptrend out of its first pullback since its
recent breakout from a high-level consolidation.
Symantec
(
SYMC |
Quote |
Chart |
News |
PowerRating), mentioned
recently, still looks like it has the potential to rally out of a shallow
pullback.
Newmont Mining
(
NEM |
Quote |
Chart |
News |
PowerRating)
reversed to close well after tailing lower. This action suggests that its strong
uptrend remains intact.
Other
Once again, thanks for the
continued emails on the walk through. I promise as soon as the market, sector
and stocks set up, we’ll do another one.
Best
of luck with your trading on Wednesday!Â
P.S. Reminder:
Protective stops on every trade!
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have some really great material in there and I appreciate the knowledge that you
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