Why I’m Concerned About The Action In The S&P
Looking to the indices, on Wednesday, the Nasdaq dipped in
early trading but quickly began to rally. However, it soon found its high and
sold off to make new lows by mid-day. It then worked its way higher throughout
the most of the afternoon but once again sold off going into the close. After
all was said and done, it finished just about where it started.Â
Â
The S&P also traded on both sides of the market but
finished in the minus column. This action has it stalling short of its old
highs.
Looking to the sectors, although technology gave back
some of its recent gains, it remains in a strong uptrend and could offer
opportunities soon on a continued pullback. Areas such as computer hardware
remain in especially strong uptrends. On the downside, although they remain in a
longer-term uptrend, the homebuilders still remain questionable–stalling short
of their prior highs. For the aggressive, you might look for a trade (short)
here.
So what do we do? I still remain concerned that the
S&P has failed to keep pace with the Nasdaq. Further, the fact that it has
stalled shy of its old highs (while the Nasdaq when through them like butter)
combined with an Oscillator Swing System sell* (email me if you need the rules/backtested
results) suggests that we could be in for some corrective action. Further, once
again, I found myself tooling through my scans over and over again looking
for something worthwhile to trade. Therefore, I think still think that now is
the time to let the markets come to you versus chasing it at these levels.Â
For the aggressive, you might want to look for a shorting opportunity in the
S&P Spyders
(
SPY |
Quote |
Chart |
News |
PowerRating) or the aforementioned weak homebuilders.
No setups tonight. Remain patient, if the the S&P rolls
over and the Nasdaq follows, we could see transitional setups. If the Nasdaq
sets up as a pullback and begins to rally, then we will likely see a plethora of setups in technology.Â
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*As many of you know, I’m not a huge fan of
Oscillators but they can test out in a choppy market like the S&P futures.
“….. I still feel that your book is the best book on the subject and
offers me the best methodology for swing trading. In short, your method is outstanding….”
Michael M.
