Still A Trend Follower
On Thursday, the Nasdaq opened slightly weaker and sold off fairly
hard. Then after drifting and chopping sideways for much of the day, it resumed
its sell off. This action has it closing poorly.
The S&P put in a similar performance.
So what do we do? It now appears that the market is
attempting to resume its downtrend out of a pullback from lows. This pattern is
further backed up by an overbought market and sell signals: a CVR-III sell
(Wednesday), a TRIN Reversal (OK, it misses by a hair, but it’s in the sprit of
the setup), a Close Count sell and a Oscillator Swing sell signal (in the spirit
of the setup). Therefore, continue to focus on the short side but make sure you
wait for entries and honor your stops. One last point, since the market itself
it overbought, focus on issues that are also overbought (i.e., deeper pullbacks).
Looking to potential setups, Chubb Corp.
(
CB |
Quote |
Chart |
News |
PowerRating), in the
weak insurance sector,still looks
poised to resume its strong downtrend out of a deep pullback.
Pullback From Lows –OR– “V” Bottom?
I seem to be getting a lot of questions about how do you
“know” if a sharp pullback from lows isn’t really a “V”
bottom? My answer, in a word, “hindsight.”
As a trend player (some call me a trend-following moron), I
play each pullback as if the longer-term trend will continue. And, I’m the first
to admit that I will be wrong when the market does truly reverse. Hopefully, I won’t get an entry,
or if I do, will get stopped out with a
modest loss. Then, after it turns, if I start getting transitional setups (e.g., Bow Ties, First Thrusts, Cup and Handles etc…), I’ll be there to play that
direction too.
Other
On Tuesday,
I showed a recent trade (walk through) from my trading service. I also offered
an “archive” of the services for this trade so it could be studied
more carefully. The zipped file is fairly large (about 1.7mb) and seems to be
rejected by most “browser”-based emails (e.g., “hotmail”). If you
requested it and did not receive it, please send me an alternate email address
and I’ll be happy to re-send.
Email Of The Day
Dave –
I’ve been with TradingMarkets.com almost since day 1. I’ve been following you’re work on a daily basis since that time and have several 3-inch, 3-ring binders filled with all your strategies and commentaries. (If your computer systems ever crash, just call me, because I have every word you’ve ever written on the Web in hard copy form! I’m like a Dave Landry Zip Drive backup.) My trading has improved by a factor of a hundred over that period as I have closely mirrored your style — actually, it always was my style as well, but watching your success gave me all the more confidence that I was on the right track from the start. I just keep refining the process, trying to keep it simple and efficient. I’d appreciate it if you would send me your archived files mentioned in your 7/30/02 nightly update so I can keep my Landry library up-to-date.
Following you, the BIG BLUE ARROW has pointed straight at my bank account. And I wanted to say thanks.
I am a trend-following moron. You my friend — you are THE KING.
Trade well –
Chris K.
Best of luck with
your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!