Why Tuesday’s Action Was Important
Looking to the indices, on Tuesday, the Nasdaq opened
firmer and after a brief dip, rallied nicely. It then pulled back deeply but
found its low by mid-day and resumed its rally for the remainder of the day.
This action has it closing well.
The S&P also rallied after finding its low around
mid-day.
Looking to the sectors, Monday’s action keeps many in their
longer-term uptrends, putting them near or at 52-week highs. This includes (but
not limited to), Internet, selected financials, selected health services,
selected leisure, industrial metals, and gold. Biotech also remains
constructive.
Questionable areas such as retail, semis, the cyclicals
rallied nicely. However, it’s still important that these sectors to make it past
their recent and longer-term highs. Otherwise, tops could be in place
here.
On the down side, telecom was hit hard and now joins the
list of questionable sectors.
So what do we do? I’m very encouraged by
the fact that the Nasdaq only took one day to close Monday’s gap down. This
action suggests that traders/investors are willing to buy on the dips and keeps
the uptrend intact. The only thing is that because it snapped back so fast, it
leaves us with very few setups. Therefore (assuming that you still long from the
prior pullback), probably the best thing to do is to continue to manage what you
have–scale out and trial a stop higher as the market moves in you favor.
No setups tonight.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….I just finished reading your book for the 3rd
time…the book has paid for itself trade after trade…thanks for a straightforward
swing trading manual! …”
Steve T.
