Read Larry Connors' blog – Short Term Trading Strategies
Dave Landry is principal of Sentive Trading, a money management firm, and a principal of Harvest Capital Management. Mr. Landry is the author of two top selling books, Dave Landry's 10 Best Swing Trader Patterns And Strategies and Dave Landry On Swing Trading. If you would like a free trial to Dave's Nightly Swing Trading Alerts Report click here or call 888-484-8220 ext. 1.
Stick with your opinion until the market PROVES you wrong
Trying to catch every little zig and zag can drive you nuts (which some say, is a short trip for me). You're much better off trading in the direction of the major trend until proven otherwise. Let's take a look at the oils. Notice that they had been in a strong downtrend as of late. Then, they retrace sharply. However, notice that they stopped right at the prior resistance. If they got past this "inflection point" then it's possible that they could have been bottoming. However, they didn't. This is why I stayed bearish on the sector. Notice that they sold off hard from these levels today.
Notice that Marthon Oil Group (MRO | Quote | Chart | News | PowerRating), mentioned recently, formed a similar pattern--selling off nicely after approaching resistance.
Also notice that Dril-Quip (DRQ | Quote | Chart | News | PowerRating), mentioned for today in my service, sold off nicely too.
As you can see, it often pays to stick with the major trend until proven otherwise. I'll "walk through" these examples in Wednesday's interactive lesson (see below).
On Monday, the NASDAQ ended in the plus column after dipping lower.
Ditto for the Ps.
So what do we do? The big blue arrows continue to point the way.
No setups tonight--most of my setups lately have been commodity related shorts--and those triggered on Tuesday. Remain patient--as long as the market continues higher, we should see plenty of setups.
Wednesday's With Dave
It's that time again. On Wednesday, 10/04/06, at 11:00 AM EST, I will be hosting my weekly interactive lesson. This
week I plan on covering sticking with your opinions/trades until proven wrong,
how to recognize when a market is making a possible transition, current market
& sector conditions, plus some other stuff. After that, I will take your questions on individual issues or trading in general. As usual, admission is free (and I give money back guarantees if not completely satisfied!). However, the space is limited by the software. Email me if you need instructions on how to join (the same each week) or if you would like the archives for the prior year (covering topics such as money & position management, scanning, picking the best setups, sectors, longer-term trend following and a bunch of other stuff).
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. If you would like a free trial to my trading service, click here.
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