Tradable Bounce
Heads up! At the time this is being published, Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) had positive news. The futures, especially the Nasdaq futures, are
up sharply. This will likely cause a pop up early on. Use caution when trading
around the open. Also, the following commentary was written before this
news. Make sure you factor this into your trading plan.
On Wednesday, the Nasdaq open lower and chopped around for
most of the day.Â
The good news is that it managed to close in the plus column
after trading lower. This action forms a “hook” up and puts the index
right at its recent lows.
The S&P was also choppy but
managed to close well after “tailing” lower.
The VIX hit levels not seen in nearly a month before
reversing. This action sets up a CVR I, CVR III and CVR III-Modified Buy
signal.Â
The Nasdaq 100 VIX also
reversed after closing in on one-month highs.
So what do we do? The stabilization in the indices combined
with the VIX signals suggests that we could get a tradable bounce in
here. Therefore, for the nimble, look to nibble on the long side. Keep in mind
though that the market still remains vulnerable–so keep a chair handy in case
the music stops.
Looking to potential setups, Andrx Corp.
(
ADRX |
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Chart |
News |
PowerRating)
appears to have stabilized after Tuesday’s hard down. This action suggests that
its strong uptrend remains intact.
Smoke ’em If You Got ’em
Smith
International
(
SII |
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News |
PowerRating), mentioned recently, gapped lower and proceeded to sell
off, dropping over four points at its lows. As I mentioned on Traders Wire
Interactive this morning as it was trading just off its lows (a), make sure you
lock in partial gains when blessed with a quick profit. See the link under the
“walk through” for more on money management.
Walk Through Con’t.
Lately,
we’ve been looking at where we could have entered, taken partial profits and tightened
stops on Human Genome Sciences
(
HGSI |
Quote |
Chart |
News |
PowerRating), a stock mentioned recently. If you
haven’t read these commentaries, now might be a good time before
proceeding.Â
On Wednesday, HGSI tailed lower
before reversing to close well. I believe the candle people call this a “Doji
Hammer”. For purposes of this walk through, we’ll keep trailing the stop at
two-bar highs. Keep in mind that as a swing trade, there’s nothing wrong
with locking in a piece or all of the profits, especially on such a sharp move.
For more information on money management and position
management read my articles under Traders
Lessons.
Best of luck with
your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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Alaska
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