The Last Pullback?

  • September 28, 2001
  • Dave Landry

 

On Friday, Nasdaq opened strong and rallied
early. However, the rest of the day it mostly chopped around.

The index failed to take out its recent highs.
This suggests that its downtrend remains intact.

 

The S&P, once
again, continues to out perform the Naz. It took out the top of its
recent range and rallied to close well.

 

So what do we do? The
indices, especially the Nasdaq, appear to remain in pullbacks from
lows. Said another way, momentum still favors the downside. Therefore,
keep some shorts handy (but, as always, wait for entries) should this
rally from lows stall out. And, at the risk of boring you to death,
continue to keep it light while we remain in this event–driven
environment.

Looking to potential setups, Enzon (ENZN),
like biotech in general, appears to be stalling out in its rally from
lows. This action suggests that its downtrend remains intact. 

 

Comerica (CMA),
mentioned recently, still looks vulnerable. Just wait for follow
through as it rallied to close well on Friday. . 

Question

When trading
pullbacks, how do you know if the this pullback is not the last?

Answer

Markets often go much
further than most people are willing to believe. They often thrust,
pull back and thrust over and over again. To answer the question: You
don’t. You will be wrong on the last pullback. Therefore, you should
wait for follow through in the intended direction (and hopefully you
don’t get filled) and should use protective stops in case you do.

 

Enjoy your weekend
and best of luck with your trading on Monday!

Dave Landry

sentivetradingco@prodigy.net

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

P.P.S.
I look forward
to meeting you next
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.

“…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) 

 

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