Willing To Wait
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
market’s opening. Therefore, overnight events may alter the
outcome of these observations.
On Monday, the Nasdaq lapped higher on the open (a) and,
after a brief pullback, rallied to close well (b). This puts it just above the
recent resistance (c) and above the psychological 3,000 level.
weekend proves how quickly things can change in a news-driven environment. What
could have been a massacre on Monday’s open was averted and actually turned
positive thanks to the Supreme Court’s overruling on Saturday. Speaking of decisions,
as you are probably aware, markets are “buy the rumor, sell the news.”
Therefore, we’ll likely see a sell-off regardless of the outcome of the election.
The market is now
very overbought based on price action, the CHADTP and the McClellan Oscillator.
Of course, this doesn’t mean that it can’t go higher. However, an overbought
condition should be respected, especially in a bear market. Â
So what do we do?
The recent rally from lows is encouraging, but so far, is still just a retrace
from lows. I’d prefer to see the Nasdaq get above its 50-day moving average (the
red line in the above chart) and stabilize before getting too excited. Looking
to my database, I’m still not seeing many stocks set up for the momentum swing
trader. Therefore, even if this is “the” bottom, I’m still
willing to miss the first leg off the lows and be ready to pounce on the first
pullback.
Looking to potential
setups, May Department Stores
(
MAY |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, sold off to the area of its recent breakout but recovered to
close well. This suggests its uptrend remains intact.
Caterpiller
(
CAT |
Quote |
Chart |
News |
PowerRating), mentioned Friday night and on the Pullbacks
Off Highs List, sold off earlier in the day but recovered to close well.
This action forms a bullish outside day in a pullback.
On the short side, Sealed Air Corp.
(
SEE |
Quote |
Chart |
News |
PowerRating),
mentioned forever, still looks like it has the potential to break lower out of
a low-level consolidation.
Sirius Satellite
Radio
(
SIRI |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Lows List, took out its recent pivot low (a) and looks poised to
challenge its old lows.
Best
of luck with your trading on Tuesday!Â
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
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