TRADING IDEAS by Dave Landry, Director of Research
On Friday, the Nasdaq opened firmer and rallied nicely in early trading. However, it found its high by mid-morning and sold off hard throughout the rest of the day. This action has it closing poorly.
The S&P stalled out too in early trading and sold off hard. This action puts it right back to minor support.
Looking to the sectors, most were hit hard. As one would expect, this puts many back to key support. Friday's action also helped to confirm the rollover in others mentioned recently such as broker/dealer, semis, and biotech. One now has to wonder if previously strong sectors such as homebuilders, HMOs, Internet and software will be next.
So what do we do? On Friday, the indices confirmed what I was concerned about within the sectors--stalling action. Yes, the longer-term trend (a.k.a. the blue arrows) still points up but many groups could be rolling over. Therefore, probably the best course of action is to look begin nibbling on the short side. Transitional patterns (e.g. First Thrust, Bow Ties, Inverted Cup and Handles etc..) will probably offer the best opportunities (vs. stocks in established downtrends).
Looking to potential setups, on the short side, the Nasdaq Biotech Ishares (IBB), mentioned recently, still appear to be in the process of forming a First Thrust/Bow Tie formation.
Market Data 
Markets 
AI
