Why I Still Think You Should Wait For A Correction Before Buying
Looking to the indices, on Tuesday, the Nasdaq opened lower
but quickly found its low. It then worked it way higher in a choppy fashion
throughout the day. This action has it closing well and at new highs for the
year once again.
The S&P put in a somewhat similar performance. This
action keeps it at new highs for the year too.
Looking to the sectors, many remain at or near 52-week
highs. This includes (but not limited to): broker/dealer, most financials,
insurance, computer hardware, major oils, metals and mining (less gold and
silver), transportation (regional air is in a strong uptrend), banks, retail,
homebuilders, Internet, telecom (most sub-sectors), and software (most
areas).
So what do we do? With the indices at new
highs for the year and the overwhelming number of sectors in uptrends,
you’d think I’d be a bull. Well, I am, sort of. The big blue arrow points higher
but shorter-term, I still think the market needs to (and will) correct for those
overbought reasons given recently. And, at the risk of preaching, I don’t
think that buying an overbought market is prudent. Therefore, my commentary
continues to remain the same: On the long side, wait for a correction (don’t worry, even if
the market thumbs its nose at all these indicators and blasts to new highs, I
can assure you that there will be an opportunity on the first pullback).
And, once again, on the short side, for the aggressive (or those looking to hedge
longs), continue to look for a possible trade in the index shares should they
show signs of reversing.
No setups tonight. We should see a plethora of setups after
the market corrects.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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