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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (40086)	8/20/2003 4:16:30 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69218

TradingMarkets.com Why I'm Willing To Miss A Breakout Tuesday August 19, 6:14 pm ET By Dave Landry Looking to the indices, on Tuesday, the Nasdaq open firmer but soon reversed and began to sell off. However, it found its low quickly and began to rally. Then, after trading back and forth, it resumed its rally going into the close. This action has it closing well, above minor resistance, and nearing its old highs. The S&P traded back and forth and was only able to hold on to a slight gain. This action keeps it in a trading range. Looking to the sectors, the semis extended Monday's rally. This action puts them at new highs. Other strong sectors include retail (with the exception of home improvement), cyclicals, and gold. On the down side, major drugs and utilities remain in downtrends. So what do we do? The extension of Monday's rally in the Nasdaq (NasdaqSC:^IXIC - News) was very impressive. However, so far, the S&P remains stuck in a trading range. Further, you can't completely ignore the low VIX readings (which suggests complacency). And, the fact the the indices are overbought. Therefore, one has to wonder if the indices will correct before breaking out. Considering the above, continue to put together your shopping list in the aforementioned strong sectors, but wait for a pullback before looking to enter. True, you might miss some upside but at least you won't be buying at potentially dangerous level. On the short side, for the nimble, we could see a counter trend trade soon in the indices. No setups tonight. Once (all of) the indices clear their trading ranges, we should see many stocks setting up on a pullback. Hey Dave, You're Missing The Breakout! Since breakouts are prone to failure, I'm not a breakout trader (not that there's anything wrong with being a breakout trader -- if you are one, God bless you!). I essentially look for a trend and then a place to enter it (usually a pullback). So yes, if the market breaks out, I will miss it. However, I will look to enter on the first pullback if and only if the trend shows signs of re-asserting itself. Best of luck with your trading on Wednesday! Dave Landry P.S. Reminder: Protective stops on every trade! [Harry: Don't forget to stick with a style that suits you. When you deviate that is usually when you get into trouble. Making up trading rule on the fly is what usually gets you into trouble.]