Things Look Great But Should You Buy Or Wait?
On Tuesday, the Nasdaq traded sideways throughout the morning, rallied
for much of the afternoon, and then pulled back late in the day. This action
keeps it well above the recent 2100 resistance level (which should now act as
support).
The S&P ended slightly higher. It is now within single
digits of making new highs for the year.
In the sectors, the action remains great. Many areas are
either breaking out and/or remain in uptrends. This includes, but is not limited
to, retail, banks, semis, software, telecom, metals & mining, biotech, and
broker/dealer. Internet has been lagging but seems to be catching up in more
recent times. Most of the issues in downtrends are “defensive” stocks
such as food, tobacco, and consumer non-durables.
So what do we do? The continued strength
in the market is impressive. The sector action is equally impressive. As
mentioned above, about the only areas in downtrends are the defensive areas. My
only concern is that the market is becoming overbought. Therefore, focus mostly
on managing existing positions vs. initiating new ones. On the next pullback, we
will look to get more aggressive.
As far as setups, Frontier Oil
(
FTO |
Quote |
Chart |
News |
PowerRating), in the
strong energy-oil & gas refining and marketing sub-sector(a), looks poised
to resume its uptrend out of a pullback. Use caution though since this area,
like the market itself, is overbought.
FYI
On Wednesday at 11 A.M. EST, I will be doing my weekly
interactive audio/visual presentation. So far, I’ve got a really great show
planned (if I say so myself). In addition to current conditions, I will be
covering the psychology of staying with positions, managing winners,
“squeezing” extra profits out of trade, and applying discretion.
I will also take your questions on trading in general and/or on individual
issues. Email me if you would like a (free) link to join and/or the file containing the
archives for the prior year (covering scanning, sector analysis, picking the
best setups, position management, damage control, etc).
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
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