Time For A Bounce?
On Monday, the Nasdaq opened lower and trended
lower for most of the morning. It then found its low by early
afternoon and chopped higher. However, it gave up much of these gains
going into the close.
This action has it closing poorly.
The S&P also ended lower. It is now just
below its 50-day moving average.
So what do we do? If
all I had to go on was the above two index charts, I’d be pretty
nervous right about now. However, in looking to the sectors and
numerous individual issues, I see a lot of setups on the long side
(see tonight’s Pullbacks
From Highs List for an example of what I’m seeing). This, combined
with an oversold market could lead to a nice bounce. Therefore, nibble
on the long side but only if you get entries. In other words, no
tickee, no tradee!
Looking to potential
setups, Applied Materials (AMAT)
looks like it has the potential to rally out of a Running Cup and
Handle.
Getting To
Breakeven
When you place a
swing trade, ideally you should look to tighten stops as soon
possible. For example, Abgenix (ABGX),
mentioned recently, took out its recently lows (a) triggering an
entry. Notice that the stock continued lower. In this case, the stock
should not come back to its breakout point. Otherwise, it would
suggest a false breakout. Therefore, you should look to move you stop
to breakeven—near your entry (a).
Other
Based on this column and my trading service, I’m
often asked why I don’t always adhere exactly to my rules
outlined in my articles and book. I believe that a layer of discretion
can help improve your swing trades (or any type of trading for that
matter). See my article: How
To Add A Layer Of Discretion To Your Swing Trading for more
details. Check it out and let me know what you think.
Best of luck with
your trading on Tuesday!
Dave
Landry
P.S. Reminder: Protective stops on
every trade!
"…..It
is clearly the best book on swing trading currently in the public
domain…."
Stanley O.
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