Why Charlie And Raymond Could Be Wrong About This Stock
I’m Dave Landry and I approved this column.Â
Last Wednesday, I revealed my favorite indicator for
determining trend: “the Big Blue Arrow.” Although I trivialized
this in the figure that I published, the bottom line is that the trend should be
obvious. If the right side of the chart is higher than the left*, then it’s an uptrend. If the right side of the chart is lower then the left, then it’s a
downtrend. Basically, if you can’t slap an arrow onto the chart that points in a
clear direction, then the stock (or market) is not in a trend.  Â
On Tuesday, the Nasdaq opened weak and generally continued
lower throughout the day. It did manage to bounce going into the close but this
wasn’t enough to keep it from closing poorly. The good news is that the 200-day moving
average and the June lows held (albeit just barely).Â
The S&P put in a similar performance. So far, it
remains above its 50-day moving average.
So what do we do?  Monday’s weakness
puts many sectors that have been improving back into question. Therefore focus
on the strongest areas, that so far, have only pulled back. Retail and Internet
are two that showing up in my scans. However, make sure you wait of some sort of
upside confirmation (e.g. entries) since, as you know, the market, most sectors,
and most stocks were down on Monday. No matter what you do, since the market
can’t seem to show any conviction for more than a day or so, you probably want
to continue to trade at a reduced size.
Kmart
(
KMRT |
Quote |
Chart |
News |
PowerRating), in the strong retail–discount, variety
stores sub-sector(a) (and where Raymond buys his underwear), looks like it has
the potential to resume its accelerating uptrend out of a pullback/Trend
Knockout. However, as mentioned above, based on Monday’s weakness, make
sure you wait for signs of strength.  Â
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.
Click here to learn
more, or to order.
*Please let me know if you know of a broker
who will let you trade off the left side of the chart.Â