Why You Should Wait Before Buying This Market
Looking to the indices, on Monday, the Nasdaq open firmer
and began to rally. Then, after some mid-day drifting, it resumed its rally late
in the day. This action has it closing well and nearing potential resistance,
circa 1750.
The S&P put in a similar performance.
So what do we do? Monday’s rally was very
impressive. It puts the indices closer to top of their trading ranges. And if
they do break out, this would obviously be bullish for the market longer-term.
However, mso-fareast-font-family:”Times New Roman”;mso-ansi-language:EN-US;mso-fareast-language:
EN-US;mso-bidi-language:AR-SA”>shorter-term, the indices are overbought. Also,
the VIX is hitting its lowest level in over a year and (more importantly)
beginning to stretch away from its moving average. Â This
suggests that the indices are due to correct. Therefore, you might want to put
together you buy list but wait until the market breaks out and corrects before
doing any shopping. Stronger areas to watch include the semis and retail. On the
short side, for the nimble, we could see a counter trend trade soon in the
indices.
Looking to potential setups, on the short side,
Mid-Atlantic Heath Services
(
MME |
Quote |
Chart |
News |
PowerRating), mentioned forever and in the weak HMOs,
still 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 Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…..Your book on your swing trading method is succinct, straightforward, clear and above all useable. Thank you for the tools it provides. Please write more. You’re not just another writer, you’re a teacher who makes a difference…”
Michael S.
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