Why You Should Exercise Caution On The Long Side
On Monday, the Nasdaq opened flat and after a brief dip,
began to rally. However, it quickly found its high. It then chopped back and
forth for the remainder of the day.
This action has it stalling at the top of its trading
range.
The S&P put in a similar performance.
It too appears to be stalling at the top of its trading range.
The VIX hit new 10-month lows again. Its high
remains below its 10-day moving average and it also closed more than 10% below
that average. This action forms a repeat CVR-III sell signal.
So what do we do? The fact that the indices are stalling
near the top of their trading range, combined with the action in the VIX, suggests
that the indices remain poised to correct. Therefore, avoid new longs and look
for shorting opportunities. For the aggressive, you might look to play
an opening gap reversal in the index shares, should they gap higher on the open
and then show early sides of reversing.
There were very few meaningful setups tonight. Remain
patient, we will likely see more setups after the indices either break out or
rollover.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….. your book is very clear and easy to follow. I think it is
helping me to improve….”
Judy C.
