What I Like About Wednesday’s Action
Looking to the indices, on Wednesday, the Nasdaq rallied
for a solid trend day higher. This action has it nearing its old closing high.
Although it wasn’t as impressive as the Nasdaq, the S&P
also rallied for a nice trend day higher.
So what do we do? Wednesday’s rally
suggests that the longer-term trend of this market remains intact. Of course, it
doesn’t take a rocket scientist to figure out that a market approaching its old
highs is in an uptrend. With that said, I especially like the way it behaved.
Sectors in trends that have have recently pulled back (some very sharply) are
resuming their uptrends–almost “textbook” in nature. However,
before we start kissing each other, don’t forget to manage your positions–take
partial profits/trail stops higher when offered (maybe ISSI, mentioned Tuesday,
will make a good example for Thursday’s column). On new positions, focus on
those areas that have pulled back and look poised to resume their strong
uptrends (vs. buying those who were up sharply on Wednesday*). On the short
side, except for select energy, you might want to hold off for now and see if
the indices will truly breakout. In other words, don’t fight the tape.
Looking to potential setups, although the sub-sector is
lagging a bit (but in an uptrend nonetheless), Zimmer Holdings
(
ZMH |
Quote |
Chart |
News |
PowerRating) in
medical appliances and equipment, looks like it has the potential to resume its
persistent uptrend out of a pullback.
Best of luck with your trading on Thursday!
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.
*I’m a pullback player and not a breakout player
(not that there’s anything wrong with that–reminds me of that Seinfeld
episode).