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.
On Friday the Nasdaq opened higher but it quickly found its high and
began to sell off. It continued to trend lower throughout most of the day but
did bounce going into the close.
The Ps put in a similar performance.
So what do we do?
The S&P cruised through the 1280
resistance, seeming like it wasn't going to look back. However, not only did it
look back, it put it in reverse to end in the minus column. At the risk of
preaching, this is why I always recommend waiting for follow through vs. trying
to trade breakouts. So, wait for it to break out and follow through. In the
meantime, notice in the Ps (S&P ) that my precisely drawn arrow points
sideways (if you don't know how to draw arrows on charts, consult with a young
child for assistance--they won't argue fundamentals or their position with you,
they'll just draw the line). This is not good for the momentum based trader.
Therefore, avoid getting too aggressive on either side of the market. And, focus
on commodity related issues since they can trade independently of the indices.
In this category, I'm seeing a few energies setting up.
Combining Big Picture Technical Analysis With Shorter-Term Patterns
When I was first learning how to read charts, I often tried to trade off of
"big picture" technical patterns. I quickly learned that it was
difficult to trade off of these patterns. This is especially true if you are
looking for short-term gains and/or trying to control risk. I discovered
that you're much better off finding a short-term pattern within a larger
pattern. This helps to better time your entries.
Considering the above, notice that Tidewater (TDW | Quote | Chart | News | PowerRating) (a possible
energy play) has formed a "big picture" double bottom. Also
notice that on the right side of the chart (and by the way, if you find a broker
that lets you trade off the left side of the chart, LET ME KNOW!!!), it
has formed a pattern I call a Bowtie (email me if you need the rules or if you
would like a free primer on swing trading). Just make sure you wait for an
entry since it was down hard on Friday.
Best of luck with your trading on Monday!
Dave Landry
dave@davelandry.com
P.S. Reminder: Protective stops on every trade!
P.P.S. If you would like a free
trial to my trading service, click
here.
