These Two Areas Could Be Headed Lower
Looking to the indices, on Friday, the Nasdaq opened firmer
but quickly found its high and began to sell off. It then traded back and forth
but did manage to rally going into the close. This action puts it back to its 50-day moving
average and keeps it in a trading range.
The S&P traded back and forth but also rallied going
into the close.
So what do we do? Nothing much has changed.
Tech areas such as the semis and selected hardware still look vulnerable. Retail
also remains soft and looks like it has the potential to continue lower. The
strongest areas remain cyclical stocks including chemicals and commodity related
stocks such as energy and metals & mining.
On the long side, stick with the stronger areas mentioned
above until other areas can catch up.
On the short side, as implied above, my scans are turning
up numerous stocks in retail and the semis.
No matter what you do, use caution since trading will
likely be thin in next week’s holiday shortened week (1/2 day trading Wednesday
and Friday, no trading on Thursday).
Looking to potential setups, Kohl’s
(
KSS |
Quote |
Chart |
News |
PowerRating), in the weak
retail-department stores sub-sector (a), looks like it has the potential to
resume its persistent downtrend out of a pullback.
In the semis, International Rectifier
(
IRF |
Quote |
Chart |
News |
PowerRating) looks like
it has the potential to continue lower out of an inverted cup and handle.
Best of luck with your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
P.P.S. Learn my 10 best swing trading patterns and strategies in my new book.
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