Vacation Time?
On Tuesday, the Nasdaq opened slightly lower but began to
rally. It then drifted while waiting on the Fed. After the announcement, it had
a few head fakes and then sold off fairly hard.
Looking at the bigger picture, notice how persistent the
downtrend has been over most of the summer (a). This has been a momentum
swing trader’s dream. However, now notice how it really hasn’t gone anywhere as
of late (b). This is a momentum swing trader’s nightmare. Fortunately, my
sophisticated drawing tools allow me to do this complex analysis. Please don’t
try this at home, unless of course, you have a 6-year old kid at your disposal
and a straight edge.
The S&P appears to be bumping up against a resistance
level.
So what do we do? It appears that the market remains
vulnerable based on Tuesday’s price action, a recent TRIN Reversal sell signal
and the fact that we still remain in a longer-term downtrend. What concerns me
is the fact that the indices are choppy and have been trading mostly sideways as of
late. Therefore, it’s probably not a bad idea to keep it light and let the
situation develop. If you haven’t gotten in your summer vacation yet, now may be
a good time.
Looking to potential setups, the semis remain in a solid
downtrend. Continue to look for shorting opportunities here.
Other
I wanted to thank those of you who came to my seminar and
those who stopped to introduce themselves at the Online Traders Expo. It was
great to meet you.
Best of luck with
your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!