Where To Look For Buying Opportunities After A Pullback
Looking to the indices, on Thursday, the Nasdaq opened
firmer and initially rallied. However, it found its high fairly quickly and
began to sell off. It found its low by mid-day and then chopped its way higher
for the remainder of the day. This action has it hitting and closing at a new
high for the year.
The S&P wasn’t as impressive. It closed poorly after
tailing higher.
This action keeps it in a trading range.
Looking to the sectors, this is the most positive action
that I’ve seen in quite a while. The semis blasted to new highs. Retail and
cyclicals also hit new highs (but with less vigor). Software is flirting with
the top of its trading range/old highs as is Internet. And, biotech is
attempting to plow through overhead resistance. On the downside, major drugs hit
multi-month lows.  Â
So what do we do? I’m encouraged by the fact
that the Nasdaq made it to new highs. Further, you can’t ignore the positive
sector action. However, the S&P remains stuck in a trading range and the Nasdaq
remains overbought. Also, the markets remain generally thin and choppy.
Therefore, I think the best thing to do would be to wait for the aforementioned
strong sectors to pull back and then look for an entry. For now, continue
to keep it light until the S&P gets out of its trading range.Â
No setups tonight. I would imagine that we will see setups
soon with the end of the summer doldrums near.Â
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…..The best thing about Dave Landry on Swing Trading is that it is so easy to read and understand. Examples are numerous and the theme of money management – with concrete examples – is repeated throughout the entire book….”
Active Trader Magazine
Â
