TKO Tuesday
On Tuesday, the Nasdaq opened weaker and sold fairly hard.
It found its low by early afternoon and then chopped its way sideways to higher
throughout mid-day. Then, late in the day, its sell off resumed. This action has it closing poorly.
The S&P put in a similar performance.
So what do we do? Even though Tuesday was fairly ugly, I
still remain generally positive towards the market. Many sectors, namely
technology, remain in strong uptrends. Tuesday’s “knock out” action
may have shaken out the weak hands and attracted some eager shorts. This
could clear the way for the next leg higher and is the theory behind my Trend
Knockout (TKO) pattern. Therefore, look to buy technology but wait for
entries–or–if you are more aggressive, look to play an early morning reversal
(should it occur), especially if the market gaps lower on Wednesday. Once again,
I haven’t completely forgotten about the short side. Tuesday’s bounce in the
HMOs could set them up for another leg lower. Continue to watch for
opportunities here.
Looking to potential setups, Cymer
(
CYMI |
Quote |
Chart |
News |
PowerRating), in
the strong semiconductor–equipment and materials sub-sector (a), looks like it
has the potential to resume its strong uptrend out of a Double Top Knockout (DTKO).
Internet software and services is also set up as a DTKO.
Considering the above, Checkfree
(
CKFR |
Quote |
Chart |
News |
PowerRating) is set up like
the sector itself.
Best of luck with
your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…Feel free to quote me, the book is fantastic. It is written for traders who want to know the real basis of
successful trading. No glory stuff. No hero tales. Plain old sound advice which is a rare commodity in this business….”
Mike Marlow
