The Ps probed higher but ran out of steam to end flat on the day.
The Quack and Rusty managed to eke out small gains but they also ended off their best levels.
It feels like the retrace is done, at least for now.
Futures are very weak pre-market so this confirms this feeling.
Many of the areas that have been retracing such as Health Services, Insurance, Banks, and Financials also ran out of steam. I suppose this is no big surprise when the overall market, especially the broad based Rusty, looks poised to make a new leg lower.
As I have said often recently (and will discuss again today in the chart show), predicting the market is harder than predicting the direction of individual issues. DO your market analysis to get a feel for where things might be headed but let the ebb and flow control your portfolio. Even if we had a crystal ball that told us that the market would slide, we would have left money on the table by exiting all longs (see last week’s chart show).
As I have been preaching, the pressure’s off. Don’t worry about getting everything right—trust me you won’t. If the market stops you out of some positions, that’s great. Big Dave, how can that be great? Well, it’s the market telling you that you don’t want these stocks stinking up the joint. Yes, I drop an F-bomb when this happens, but I immediately scream NEXT! On the flip side, let the market keep you in positions that are working. We had one go up 35% since the market top. Another one went up over 20% during the slide. Exiting all when things got a little iffy would have taken us out of what might turn into the biggest winners of 2014.
So what do we do? On the long side, the only area that I’ve liked recently is Gold. And, since it has already made its move, I’d hold off on new positions here for now (I’ll show you why in the chart show). On the short side, I’m seeing a plethora of setups, especially in those aforementioned areas that look poised to make a new leg lower. Just make sure you are careful around the open since the futures are so weak. Regardless of what you do, continue to practice proper money and position management—wait for entries on new positions, honor your stops on existing ones, and take partial profits as offered/trail your stops higher.
Come to the chart show if you are not too busy saving lives, building buildings, repairing automatic transmissions, or doing other great things.
Best of luck with your trading today!
Free Articles, Videos, Webinars, and more....