Watch For A Bounce From Oversold
On Monday, the Nasdaq gapped lower and initially continued
lower. However, it found its low in early trading. Then, after trading sideways
for much of the day, it rallied sharply. Finally, it chopped back and forth
going into the close.
It remains below
its recent trading range/50-day & 200-day moving averages.
The S&P put in a similar performance.Â
So what do we do? The fact that indices
recovered late in the day suggests that they could be in bounce from oversold
mode. Therefore, aggressive traders may look for a trade in the index
shares. For everyone else, wait to see how far this bounce will take us and then
look to get short in individual issues. On the long side, even though the market
could be in bounce mode, continue to focus on those sectors that can trade
contra to the indices such as Metals & mining and energy
stocks. Â
As far as setups, Mercury Interactive
(
MERQ |
Quote |
Chart |
News |
PowerRating),
mentioned Friday, still looks
poised to resume its meltdown out of a First Thrust. However, you might want to
hold off or trade at a reduced size since the indices appear to be bouncing.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
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