December 10, 2003
Looking to the indices, on Tuesday, the Nasdaq opened firmer but quickly found its high and began to trend lower. Then after some mid-day waiting-on-the-Fed sideways trading, it resumed its sell off going into the close. This action has it closing poorly and below its 50-day moving average (the red line below).
The S&P put in a somewhat similar performance. This action has it closing poorly and right at its recent breakout levels (support), circa 1060.
So what do we do? The good news is, the S&P held support. But, that's about it. The sector action was disappointing to say the least. Questionable sectors such as the semis were hit especially hard. Other areas that have been vulnerable lately such as software, Internet, computer hardware were also hit fairly hard. Stronger areas such as homebuilders weren't left unscathed either. Looks like I picked the wrong day to be bullish!
Considering the above, I suppose the best action would be to sit on your hands until the market stabilizes. At the least, you probably want to stick with those areas that can trade contra to the indices such as commodity related stocks. For the aggressive, you might want to start watching for transitional (i.e. early trend) shorts in those weaker areas mentioned above.
No setups tonight (Tuesday), if the market continues to slide, we could see numerous transitional shorts setting up soon.
Best of luck with your trading on Wednesday!
tradingmarkets.com |
