The Dead Cat Is Dead

  • September 25, 2001
  • Dave Landry

 

On Tuesday, the Nasdaq opened slightly higher and began to
rally. However, it found its high early on and began to sell off. It did manage
to bounce going into the close, but this only put the index slightly in the
positive column. 

The lack of follow through from Monday’s massive rally
suggests that the dead cat bounce might be over. This action sets up the index
as a pullback from lows.

 

The S&P is also now set up
as a pullback from lows.

 

So what do we do? The fact that
we didn’t see any follow through to speak of in the indices suggests that the
downtrend will resume. The caveat obviously is that we remain in an event–driven
environment. And, the next “event” could push the market in either
direction. Therefore, focus on the short side but also consider a
long or two. Finally, at the risk of preaching, continue to keep it light while
we remain in this fragile environment.

Looking to potential setups, on the short side, Medtronic (MDT)
gapped higher on the open but reversed to close poorly. This action suggests
that its downtrend remains intact.

 

For those willing to play a lower priced stock, Charles
Schwab (SCH)
is set up as a pullback from lows. If it goes up once you enter, “Just
Relax.”*

Best of luck with your trading
on Wednesday!

Dave Landry

sentivetradingco@prodigy.net

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

P.P.S.
I look forward
to meeting you in
about week
at TM2001.
Don’t hesitate to register, because in addition to
showing you every important variation on pullback setups, I’ll also be teaching
you my favorite new techniques including: how
to capture trends before the crowd using “transition in trend”
patterns and how to ride huge momentum
off false moves…both
to the long and short side.

*For those new to this column, the joke flag is
flying regarding this comment. In fact, the joke flag is almost always flying.

“…Your
book was the best. I’ve read dozens of stock market books but when I finished
yours, something clicked. Thanks for writing it and your column and I’ll see you
in Vegas….”

Regards,

Dave (aspiring trend following moron) 

 

No risk, 30-day, money
back guarantee.

 

 

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