This Is One Important Lesson I’ve Learned
On Thursday, the Nasdaq opened flat and after a
brief rally, chopped its way lower throughout the day. This action has
closing poorly and puts it right back to its 200-day moving average.
The S&P ended lower after chopping around.
It’s now back to its 50-day moving average. It remains in a trading
range–both shorter-term and longer-term. Notice that it’s essentially
gone nowhere (a) for the last 3 months.
I’m beginning to wonder if we are in for a long
road of choppy trading. The sector rotation has been vicious. As soon
as a sector gets going, it gets sold. I suppose no one wants to be the
last guy holding the bag. For example, the semis made multi-month
highs last December (a) but then promptly sold off. Then, after trying
to form a cup bottom (b), they stalled out in their first rally (c).
One has to wonder if sectors such as telecom,
software, broker/dealer (and other previously strong sectors) will
suffer a similar fate.
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So what do we do? Tonight (Wednesday) was one of
those nights where I found myself tooling through charts over and over
again. I realized that I was trying to make something happen that
simply wasn’t there. I have (finally) learned in these situations to
listen to the database and sit on the sidelines.
No setups tonight.
FYI, due to a scheduling conflict, I may not be
able to do a commentary on Friday.*
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*Hang on a second…this is Brice
Wightman, TM Editor-in-Chief, speaking. Watch for Dave on Bloomberg TV
at 3:30 ET on Friday.
“….recently read your
book and thought it was one of the best I have ever read, and I read a
lot of them….”
Sean G.
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