Still Chicken
On Monday, the Nasdaq lapped lower and sold off hard. It then
chopped around for most of the day before finishing near its lows. This action
suggests it will test its recent gap.
The S&P put in a similar performance or should I say,
lack thereof.
So what do we do? On Friday, I was chicken because the VIX
was stretched away from its 10-day moving average. Now, based on price behavior,
I have to say that I’m still chicken. They even came after many of the recently
stronger sectors such as the banks and healthcare-HMOs. Further, as I look to my
database tonight, very few meaningful setups were generated. This is usually a
sign for me to keep it light. On the long side, about the only sector that looks
really good is gold. However, after today’s breakout to new highs, everything
here is now overbought. On the short side, in light of the poor Nasdaq
performance, technology seems like the logical area of focus. Stay with sectors
that are in longer-term downtrends such as biotech, telecom and software. Avoid
the choppier issues such as the semis.
Looking to potential setups, Idec Pharmaceuticals
(
IDPH |
Quote |
Chart |
News |
PowerRating),
mentioned recently and in the weak biotechs, appears to be resuming its sharp
downtrend out of a pullback from lows.
Other
Hey, good news! Soon after the close there was this large
gentleman on CNBC that was bullish! (Didn’t catch his name, think he was
from a firm called Gruntal.)
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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