The Obvious Play, But Not Until This Happens
On Monday, the Nasdaq was firm in early trading but quickly
found its high and sold off until mid-day. It then chopped back and
forth for the remainder of the day. This action keeps it at new 9-month lows.Â
What’s interesting here is how persistent its downtrend has
been.Â
The S&P put in a somewhat similar performance.
This action has it just stopping just shy of its May lows. If broken,
this would put the index at its lowest level in 8-months.Â
It too is in a persistent downtrend.Â
So what do we do?  The market remains in
a persistent downtrend. Even previously stronger areas such as metals &
mining, defense, and now major oils appear to be breaking down from high levels.
Although the obvious play remains on the short side, the market remains too
oversold to consider getting aggressive on new positions. Therefore, if you’re not already
positioned, continue to wait for a bounce and then look to establish
trades.
On the long side, continue to focus on those issues (in uptrends) that can trade
independently of the indices. Once again, selected energies are about the only sector left that
qualifies here. Wait for entries though, since they have been soft as of late
(and so have the major oils).
As far as setups, Chicago
Mercantile Exchange
(
CME |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks poised to resume its slide out of a First
Thrust. Use caution though since this one can
move a half a dozen points in a flash (therefore, requires a very loose
stop).Â
 Â
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
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