Until The Market Does This, Look To Play Both Sides
Protective Stops On Every Trade
Like life itself, there are no guarantees in trading. As an
example, Alcoa
(
AA |
Quote |
Chart |
News |
PowerRating), mentioned recently, triggered but failed to follow though to the
downside. It’s okay to “hope” that a trades works goes in your favor.
Just make sure you have a protective stop in place in case it doesn’t.
Looking to the indices, on Tuesday, the Nasdaq traded back
and forth in a narrow range but did manage to closed on a high note. So far, the
50-day moving average has held. However, since we’ve had such a sharp slide
lower (from highs), I’d like to see more follow through from last Friday’s
rally.
The S&P put in a somewhat similar performance. So far,
the 1120 support level continues to hold. The old highs, circa 1155, could
provide resistance.
So what do we do? The fact that support (1120)
held in the S&P (last week) and the Nasdaq bounced off its 50-day moving
average is encouraging. However, I’d like to see more meaningful follow through
before getting too excited. This is especially true for the Nasdaq which has
been lagging the S&P as of late. Also, I am somewhat concerned that the
majority of my setups generated by my database lately have been on the short
side. And, when I do see longs, it seems that most are defensive in nature (e.g.
major drugs, foods, health service). Therefore, in such an environment (positive
indices, weak underlying) I think both sides can be played–at least until the
we see meaningful follow though in the indices.
No setups tonight.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my 10 best swing trading patterns and strategies in my new book.
Click
Here.