What I Like About Monday’s Action
Smoke ’em If You Got ’em
After a slow start (see recent column regarding time
stops), Zimmer Holdings
(
ZMH |
Quote |
Chart |
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PowerRating), mentioned recently (a), has moved higher(b). When blessed with a nice profit, don’t forget to lock in a piece and tighten your stop on your remaining shares to breakeven. This way, barring
overnight gaps, you have a “free” trade with the potential for a
homerun.
Looking to the indices, on Monday, the Nasdaq opened
firmer and initially continued higher but found its morning high in early
trading. The selling accelerated in afternoon trading. However, it found its low
and put in a solid rally for the remainder of the day. This action has the index
just shy of new highs for the year and at a new closing high.
The S&P put in a somewhat similar performance but was
generally firmer. This action has it breaking out above its prior multiple tops
(resistance).
So what do we do? I really like what
the market did on Monday. My feeling is, the late day sell off shook out a few
bulls and lured in some bears. I especially like the way the S&P plowed
through its overhead resistance. Looking to the sectors, Monday’s action, like
the S&P itself, puts many sectors back into potential breakout mode.
However, as you know, I am not a breakout player. Therefore, rather than buy the
breakout, I think you’d be better off putting together your shopping list. Then,
should the market have an orderly pullback, look to buy. On existing longs,
should the market continue higher, look to “trail and scale”–take
partial profits and trail your stops higher.
No setups tonight. We should see numerous stocks
across many sectors setting up soon if Monday’s breakout holds.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
P.P.S. Learn my best swing
trading strategy in my new interactive CD-ROM. Click
here now for details.