Why I’m Not Playing The Bounce
On Thursday, the Nasdaq opened flat and worked its way
lower throughout most of the day. It found its low late in the day and rallied
to close well.
The S&P also closed well after tailing lower.
So what do we do? The intraday turnaround from a very
oversold condition combined with an OSS buy (email me if you need the
rules) suggests that we are in bounce mode. So, should we run out and buy? Nope.
I think that unless you are a daytrader playing the wiggles, I would avoid
taking positions. I’m basing this on the fact that the market is being jerked
around by every little piece of news (factual or otherwise). What would it take
for me to look for a bounce play (in the indices)? I would consider a trade if
we had had multiple buy signals and were extremely oversold (e.g., a
“panic” type spike). For now, probably the best course of action would
be to wait to see if we do bounce and then look to get aggressive on the short
side.
No setups tonight. On a bounce (i.e., pullback from lows),
we could see plethora of setups in the many sectors in sharp downtrends such as
as insurance and broker/dealer.
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…. Feel free to quote me, the book is fantastic. It is written for traders who want to know the real basis of
successful trading. No glory stuff. No hero tales. Plain old sound advice which is a rare commodity in this business….”
Mike Marlow
