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On Friday, the Nasdaq sold off hard for a solid trend day lower. This action has it trading back below its recent breakout levels.
Ditto for the Ps.
So What Do We Do? Friday was ugly. The fact that the indices have now given up ALL of their breakout is concerning. The sector action isn't good either. Banks and retail are breaking down out of their sideways trading ranges. Most of tech looks like the Nasdaq itself--failing after a recent breakout. Psychologically, this does not bode well for the market. About the only area that still looks good at this juncture is the energies (use caution here though since they are overbought). I suppose this is actually a negative too. Considering the above, unless we see the mother-of-all turnarounds, aggressive traders should began watching for transitional short setups (i.e. early trend). Areas breaking down from high levels will likely provide the best opportunities.
No setups tonight. On continued weakness, we should see a plethora of transitional shorts.
Best of luck with your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
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