Still Going Nowhere Fast

November 16, 2001
Dave Landry

On Friday, the Nasdaq chopped around again and
essentially went nowhere.

The S&P was also choppy and also essentially
went nowhere.

So what do we do? We
still remain overbought. Markets can correct an overbought condition
by selling off or by trading sideways. So far, this correction appears
to be the sideways variety. However, until we get more evidence (or
the overbought condition gets walked off), we should continue to watch
for a potential sell–off.
Therefore, continue to look to play both sides.

Looking to potential setups, Silicon Labs (SLAB),
in the strong semi sector, looks like it has the potential to resume
its strong uptrend out of a pullback from highs.

On the short side, Elan Corp. (ELN)
looks like it has the potential to resume its downtrend out of a
pullback from lows.

Walk Through Continued

For educational purposes, lately, we have been
doing a walk through on Network Associates (NETA).
If you haven’t already done so, you might want to read the recent
archives before proceeding. We we last left off, we were trailing the
remainder of our position with a two-bar trailing stop. Below I have
updated the chart. As you can see, on Friday we got stopped out
of our remaining shares. I was hoping that it would keep going so I
could show you a great trailing stop example. However, we know how far
hope will get us in the markets. This is why proper money management
is necessary. For more on this subject, see my articles under Traders
Lessons.