Thinking About Shorts
On Wednesday, the Nasdaq lapped higher and after some
chopping around, rallied for a solid trend day higher. This action has it
closing well.
The S&P also rallied for a solid trend day higher after
a bumpy start.
So what do we do? Now that the correction has begun in
earnest, I think it’s time to start thinking about the short side once again.
There are a plethora of sectors in solid downtrends such as Auto Parts, Banks,
Homebuilders, Insurance, Semis and Utilities to name a few. Therefore, start
making you watch list in these and other weak areas.*
Looking to potential setups, the banks
(
$BKX.X |
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Chart |
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PowerRating)
still look vulnerable.
Golden West Financial
(
GDW |
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Chart |
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PowerRating), mentioned recently, still looks poised to continue its downtrend out of a Bow Tie.
On The Trail
When I last left off, I was discussing how I choose where
to place my trailing stops, using Varian Semiconductor
(
VSEA |
Quote |
Chart |
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PowerRating), a stock mentioned recently, as an example. On Tuesday, I had
discussed moving the stop to a 2-bar high. Since it didn’t quite get there on
Wednesday, let’s assume this stop remains intact (a).
Still Watching Isidore
More than likely, this will be my last column until next
week since Isidore appears to be bearing down on us.
Best of luck with
your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*When looking for stocks in sectors, I sort the stocks by “price per
share high” in each subsector and quickly too through stocks. If you
need more info on how I do this, feel free to email me.
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