May 13, 2002
On Friday, the Nasdaq opened slightly higher but quickly sold off for a solid trend day lower. This action puts it just about all the way back to Wednesday's launch pad.
The S&P has now also given up nearly all of its recent gains.
Now that the markets have given back nearly all of their gains, I'm having a hard time not going after the bottom pickers. I suppose I'll resist the temptation though. They will be right, someday. And, I will be wrong, guaranteed, when the bottom does finally come. For now though, I think I'll just keep trading in the direction of the big blue arrows.
So what do we do? The advantage of selling short is that moves are often fast. The disadvantage of short selling is that the moves are often fast -- blink and you miss them. On Friday, technology (especially biotech, semiconductors and software) was creamed. Now that all of these stocks have quickly returned to their old lows, it's difficult to find new shorts. Therefore, you're probably better off managing your existing shorts than looking for new ones. On the long side, my commentary remains the same: Focus on issues that have performed well lately (e.g., health services) or have the ability to trade contra to the overall market (e.g., gold).
Looking to potential setups, Anthem (ATH), mentioned recently and in strong health services--healthcare plans*, still looks like it has the potential to resume its uptrend out of a pullback.
Best of luck with your trading on Monday! |
