Why You Should Consider Doing What Many Traders Will Be Doing On Friday

  • May 27, 2004
  • Dave Landry

I’m Dave Landry and I approved this column. 

On Thursday, the Nasdaq started stronger but quickly found
its high and began to sell off. It found its low in early afternoon trading and
generally worked its way higher for the remainder of the day. This action puts
it just about back to where it started the day. It also keeps it above its 50-day moving average. 

The S&P also sold off after some initial strength but
it too turned around to finish in the plus column. This action puts it back
above its 50-day moving average.

So what do we do?  With energy beginning to
back off a bit (the underlying stocks here have topped several weeks ago, see
archives) and interest rates continuing to retreat (i.e. bonds rallying), there
is some underlying strength within the market. True, most sectors still remain
in downtrends but I am seeing some areas such as the semis trying the carve out
a bottom. As far as what action to take, I think it still might be too early to
consider the long side. I’m basing this in part on the fact that my database has
failed to generate any meaningful longs as of late. On the other hand, the list
of meaningful shorts has been decreasing. In the past, I have learned that it’s
generally best to stand aside when there isn’t much worth considering. This
probably isn’t a bad thing since the market remains choppy. Further, Friday will
likely be thin as players will be looking to start their holiday weekend early.
Therefore, you might want to consider doing the same.

As far as setups, Cardinal Health
(
CAH |
Quote |
Chart |
News |
PowerRating), mentioned
recently, still  looks like it has the potential to resume its slide (from multi-year highs) from its first
pullback–i.e. a First Thrust (as usual, shoot me an email if  you need
rules for this or any pattern mentioned in this column). 

Best of luck with your trading on Friday!

Dave Landry

dave@davelandry.com

P.S. Reminder: Protective stops on every trade!

P.P.S. My new 20-hour course is now shipping.
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