Why I Still Think The Indices Could Bounce
Looking to the indices, on Thursday, the Nasdaq opened
weaker but found its morning low fairly quickly and began to rally. However, it
found its high in early afternoon trading and sold off for the remainder of the
day. This
action has it closing poorly and puts it back below its 50-day moving average (the red line below).
The S&P put in a similar performance. It too
is now back below its 50-day moving average.
Looking to the sectors, overall, the action remains poor.
Many tech sectors appear to have rolled over (i.e. possible tops). These include
(but not limited to) software (most), Internet, and computer hardware. The
strong semis turned down on Thursday after trading higher. This action puts
their recent pullback in question. Many other areas such as financials services,
broker/dealer, and major (and regional) air have fallen off too as of
late.
So what do we do? Although I still don’t like
the sector action, the fact that the market didn’t come unglued on a news driven
day is a good thing. Therefore, I still think Wednesday’s buy signals in the
indices could still work. On the long side, if you’re not already long the index
shares, continue to look for a buying opportunities but only if they show signs
of turning back up. On the short side, began watching for opportunities in those
aforementioned weak sectors.
Best of luck with your trading on Friday!
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.