Use Market Weakness To Your Advantage
Smoke ’em If You Got ’em
Molex
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PowerRating), mentioned recently, as a potential short
(see notes on shorting below), has moved nicely lower since then (a). When blessed with such a
nice continuation of a trend, make sure you lock in a piece and move your stop to
breakeven on the remainder. This way, barring overnight gaps, you have a
“free” position with the potential of it turning into a homerun.

*Playing Both Sides
In order to survive longer-term in the markets, you must be
willing to play both the long and short side. To those looking to learn how to
short, I wrote an introductory article several years ago on Trading Markets. Click
here to read it. Note: if you can’t access to this link, let me know. I can
direct you to alternate sources or email it to you.Â
On Tuesday, the Nasdaq opened firmer but quickly found its
high and began to sell off. It then found its low around mid-day and began to
rally. However, the selling resumed going into the close. This action has it
closing poorly and keeps it at its 200-day moving average.Â

The S&P put in a somewhat similar performance.Â
As mentioned recently, like the Nasdaq, the 200-day moving average (circa
1060) remains a potential first target to the downside here.Â

So what do we do? I have been hoping for a
“washout” on an opening so the last of the longs could be flushed out.
This action would set up a nice bounce play from a panic oversold condition.
And, after that, a plethora of shorts would set up. However, since this didn’t
happen on Tuesday, nothing much has changed. The market remains oversold.
Therefore, continue to use this an opportunity to scale out of existing
short positions as opposed to initiating new ones (see above). One again,
should we get the aforementioned “washout”, aggressive traders may
look for a buying opportunity should the indices show early signs of
reversing.Â
Looking to potential setups, Carnival Corp.
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PowerRating) looks
poised to continue its recent slide out of a First Thrust, especially if it can
take out Monday’s pivot low.

Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
Click here for details.
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