Trading Ideas by Dave Landry, Director of Research
TradingMarkets.Com
July 18, 2002
On Wednesday, the Nasdaq lapped open but quickly found its high and sold off for most of the day. Then, early in the afternoon, it began to chop its way higher.
The S&P also chopped around after trading much higher. However, it under performed the Nasdaq.
In spite of the fact that its 10-day moving average is catching up with it, the VIX still remains somewhat stretched. Therefore, this still suggests that the market has the potential to bounce.
Up until now, this has been one of the best summers in memory. The market has been volatile enough to make short term trading worthwhile. And, more importantly, it has persisted in the direction of the big blue arrow. Unfortunately, all good things must come to an end. Recent choppy action has me wondering if we could be settling in to a more "normal" summer pattern.
So what do we do? I'm surprised that we haven't seen more of a bounce from recent timing signals and an oversold condition. Over the years, I have (painfully) learned that when the markets don't do what I expect, then I should stay out. Therefore, assuming you have been riding the trend down up until now, probably the best thing to do is to continue to scale out of existing shorts and trail a stop.
No setups tonight.
Best of luck with your trading on Thursday! |
