Why You Might Need To Consider A Few Shorts
On Wednesday, the Nasdaq opened firmer and rallied nicely
throughout the morning. However, it found its high in early afternoon trading
and then sold off hard. This action has it closing poorly.
Once again, the good news is, minor
support, circa 1600, continues to hold. However, the bad news is that it’s only a few
points away.Â
The S&P put in a somewhat similar performance but ended
further in the minus column. This action puts it right at minor support.Â
The overall market reversal on Wednesday now puts some
sectors in question. Those in longer-term uptrends that have made deep pullbacks
could be failing to rally out of those pullbacks. These include (but not limited
to) broker/dealer, homebuilders and to a lesser extent HMOs. Other sectors such
as semis and biotech already appeared to have rolled over.Â
 So what do we do? Although the market remains oversold and due for a bounce,
oversold could easily become “more oversold” should the support levels
mentioned above fail to hold and aforementioned weak sectors continue to follow through.
Therefore, now might be the time to put together a list of potential shorts just
in case. The semis and biotech, which already appear to have rolled over, might
be a good place to begin looking. Aggressive traders may look to nibble (on the short side) in
those sectors mentioned above that could be at the “do or die”
point.Â
Looking to potential setups, on the short side, the Nasdaq
Biotech Ishares
(
IBB |
Quote |
Chart |
News |
PowerRating) appear to be in the process of forming a First
Thrust/Bow Tie formation.Â
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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