Lately, I have being seeing things as glass half full. Some go go areas like Biotech, Drugs, and the Semis have been coming back nicely. This action suggests that their longer-term uptrends remain intact. Unfortunately, these areas and others turned back down on Tuesday. When deep pullbacks fail, they hint that the trend may be coming to an end.
Wait Big Dave, I thought you said not to get too caught up in one day’s action.
Well, I’m not. Let’s see what today—and tomorrow—brings. You know me, I call ‘em like I see ‘em. Tuesday’s action sets up several of the previously strong areas as emerging trend sell signals. Brush up on these pattern such as Bowties just in case. Click here to watch a YouTube. Join my YouTube Channel while you are there to see my other 1200 and something videos.
Can the Rusty carry the weight of the market?
There’s no real bell ringer when it comes to the markets. However, I do believe that we can’t have a bear market as long as the Rusty (IWM) can remain near all-time highs. And, so far, it’s doing just that.
Let’s look at the rest of the scoreboard.
The Ps (S&P 500) sold off fairly hard, losing nearly 1% on the day. No big deal. Unfortunately, within context of them trying to claw their way higher it is.
Ditto for the Quack (Nasdaq).
Okay Big Dave, so you’re turning a little glass half empty on us. Should we take evasive action? No. Continue to follow the plan. Let stops take you out of your longs if you are wrong. Do make darn sure you wait for entries on any new positions. It always amazes me how this simple technique can often keep you out of new trouble. Let the market decide whether or not you should put money in harm’s way.
Tell me something good. Okay, something good. Seriously, the Energies appear to be putting in a bottom. Selected issues here are beginning to look attractive. Don’t get me wrong, I’m not a value player but one has to wonder if they are a value at these beaten up low levels. As usual, don’t be a hero–wait for setups and entries.
So what do we do? Take things one day at a time—stop me if you’ve heard that before. Tuesday was “terrible, horrible, no good, very bad day”—but let’s see what Wednesday brings. Again, do honor your stops and wait for entries on new positions. Now might not be a bad time to brush up on the aforementioned emerging trend patterns just in case. I’m not crazy about shorting but as a trader I do what I have to do. I am seeing a mixed bag–both potential shorts and longs–in my so called Landry List (we’ll take a peak at a recent list in Thursday’s chart show). Above all, just breathe. Let things play out. Stops will keep you in the game longer-term. And, again, waiting for entries might just keep you out.
Best of luck with your trading today!