Why The Short Side Could Offer The Most Opportunities
Looking to the indices, on Wednesday, the Nasdaq chopped back
and forth in early trading. It found its low by mid-day and began to rally.
However, it began to sell off again late in the day.Â
This action keeps it right at its 50-day moving average and
below overhead resistance.Â
The S&P sold off harder than the Nasdaq.
This action puts it back below its 50-day moving average
and keeps it below overhead resistance. Â Â
Looking to the sectors, biotech finished down and looks
like it has the potential to continue lower out of an inverted cup and handle.
Internet still looks like it has the potential to continue lower out of a head
and shoulders top. The HMOs look poised to make another thrust down. And,
interest related stocks such as selected financials, the homebuilders, and
utilities remain vulnerable as bonds continue to slide.Â
On the upside, gold remains in a strong uptrend. Selected
retail (e.g. department stores) remains in an uptrend. And, various cyclical
stocks remain strong.
So what do we do? On a short-term basis, the
indices remain overbought. Further, they appear to be stalling out as they
approached overhead resistance. This, combined with some of the negative sector
action mentioned above suggests that the indices could continue lower out of
their trading ranges. Therefore, the short side still looks like it might offer
the most opportunities. However, you might want to continue to wait for a more decisive break lower
in the indices before getting too aggressive.
Looking to potential setups, on the short side,
Mid-Atlantic Heath Services
(
MME |
Quote |
Chart |
News |
PowerRating), mentioned recently and in the weak HMOs, looks poised to resume
its meltdown out of a First Thrust pattern (as usual, email me if you need the rules).
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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pullbacks, and bow ties to trade the futures markets……. I’ve had your book for almost a year, and I still read it often.
….”
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