Two Good Things
On Friday, the Nasdaq opened firmer but quickly found
its high and began to chop sideways. It then sold off throughout the afternoon. This action
keeps it at multi-month lows and
at new lows for the calendar year. It also keeps it below its 50-day moving average.Â
The S&P also sold off hard. It too remains at multi-month
lows/new lows for the calendar year. It also remains below its 50-day moving average.Â
So what do we do? The charts continue to speak for
themselves. However, since my “mom and ’em” always told me to find
something good to say, I figured tonight (Friday), I’d try to find something. So
here it is: There are two good things I can say about this market. One, as
discussed yesterday in my trading service, we finally are beginning to see some
“washout” (i.e. sharp sell off) type action. This will scare out
nervous longs. And, two, the media is growing increasingly bearish. I would
imagine that they will start rolling out some bears next week–just in time for
a bounce. Considering the above, I think it’s too late to establish new shorts
(see below). On the long side, other than trying to play a bounce in
the index shares, I think you should continue to “step aside George.”
No setups tonight. Trail your stops lower if you took
recently mentioned shorts such as CMI and CIT.
Best of luck with your trading on Monday!Â
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
here for details.
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