Why I Think We Could Bounce
On Wednesday, the Nasdaq opened lower and after a brief
bounce, sold off hard. It found its low early in the afternoon and worked its
way higher throughout the rest of the day.
This action has it testing its February lows and reversing
to close well.Â
The S&P also tailed down to multi-month lows before
reversing to close well and in the plus column.
The VIX hit multi-month highs (a) but reversed to close
poorly (b). This action triggers several VIX buy signals.Â
So what do we do? The fact that the market is
reversing after hitting multi-month lows combined with buy signals in an
oversold environment* suggests that we are in bounce mode. I’m not sure I’d run
out and bottom fish though. You’d probably be better off looking to play the
bounce in the index shares. No matter what you do, keep it light and don’t
overstay your welcome since any bad news could throw a wrench into the above
well made plans.
No setups tonight. As mentioned above, if you are looking
for a trade, look to play the index shares on a bounce.
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*basis price itself and short-term average
advance/decline readings.Â
“….It was super book and helped me quite a bit orchestrate many of the individual tools and rules I had been reading about into an integrated trading strategy. Anyhow, thanks for great book and great web
site….”
Marty
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