These 2 Sectors Have Really Caught My Eye The Last Few Days
The
market looked like it was finally going to give a nice bounce today —
then around 3pm it all just fizzled out. This was a disappointing end to the
day. If there’s no upside follow through tomorrow that could signal another leg
down. Traders should be playing it close to the vest right now. Opportunities
that may be presenting themselves currently include pullback long entries and
topping patterns for shorts. Breakouts and breakdowns aren’t set-up just yet.
Last Wednesday I suggested the
market had pulled back sharply and, anticipating a bounce, I felt it was an
excellent opportunity to initiate some long positions in index shares. The last
3 days have provided a minor bounce for most major index ETF’s (QQQQ — flat, SPY
+ 0.8%, MDY +0.7%, IWM +1%). I would now begin aggressively scaling out of
these positions.
The oversold conditions that
existed last week no longer exist. While I still believe there is more room to
bounce up here, you’re probabilities are not nearly as good as they were three
days ago. Reversal trades should not be managed like breakout trades. If
you’re profitable, and the condition that triggered the trade no longer exists,
it’s normally a good idea to start taking profits.
In this case, if you took the
trade, congratulations. Make sure you make a little money on it. If the market
continues to move up over the next couple of days, then I would probably look to
exit the remaining into some strong buying by Wednesday or Thursday at the
latest.
Index Action
There are two sectors that have
really caught my eye the last few days. The first is Biotech, which has
rebounded nicely after pulling back sharply to just below it’s 50-day ma. The 2nd
is Internet, which fell through the 50-day ma on Thursday and is struggling to
regain it. Most other areas have simply bounced in unison over the last few
days.
Best of luck with your
trading,Â
Rob
P.S. Check out my new
Hanna ETF Money Flow System!
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