Take Friday Off

On Thursday, the Nasdaq essentially repeated Wednesday’s
trading–it sold off in the morning and chopped  sideways for the rest of the day.

This action has it closing below its recent lows.

The S&P was hit especially
hard.

So what do we do? Ok, here’s
where I bore you with my “oversold market speech”. Just because the
market is oversold, doesn’t mean it can’t go lower. And if you try to short this
market, it’ll probably bounce. This, combined with the fact that many traders
will be looking to bail out early ahead of the long weekend, suggests that we
should keep it light or not at all. 

No setups tonight.

Walk Through

It’s been a while since we did
a walk through, so here it goes. On Monday, I mentioned Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating)
as
a potential Bow Tie/Inverted Cup and Handle Short. On Tuesday, it traded below
Monday’ s low, giving us an entry at 34.90 (a). A protective stop was
immediately placed above the high of the setup, 37.35 (b) for a risk of 2.45
points. On, Thursday, the stock trades down to 32.45 giving us a profit equal to
our initial risk. At this point, half of the profits could have been taken and
the protective stop should have been moved down to breakeven (the same as the
entry). The stock continued to slide and closed poorly. Therefore, a good place
to tighten the stop to a one-bar high (d). For more on how to manage positions,
see my articles under Money
Management
.

Best of luck with
your trading on Friday!

Dave Landry

sentivetradingco@prodigy.net

P.S. Reminder: Protective stops on
every trade!

P.P.S. Some of you were concerned that Isabelle was watching
CNBC in last night’s picture. I can assure you that the mute button was on
and she was simply checking the overnight futures prices–at least that what she
told me.

“…Your book is well written, concise, and laid out so that anyone with a
rudimentary background to a master’s level trading education could be very successful. You have done a superb job! My hat is off to you Mr. Landry!!!

Matthew M. 

 

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