Dead Cat And Mouse
On Wednesday, the Nasdaq opened slightly weaker, but
quickly reversed to trade higher. However, it turned back down and sold
off to make new five-year lows. Then, late in the morning, it begin to work its way
higher. This buying continued throughout the day and has the index closing well.
The S&P also reversed after tagging multi-year lows.
So what do we do? There’s not much to say tonight. It’s
important that the market bounced from multi-year lows, but I hate to read too
much into pre-holiday trading. We remain very oversold and the shorts could play
“cat and mouse” with this dead cat. The more the market rallies, the more the shorts will be forced to cover. However, any signs of stalling and
I think they will return.
No setups tonight (Wednesday). Trading will likely be thin
and choppy in Friday’s shortened session. Therefore, unless you have to be in
front of your screens, I suggest you take the day off.
Best of luck with
your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
P.P.S. Join me in TradersWire
on July 11 at 4:30 PM EDT for a special TraderTalk session. I’ll be
going over some of my strategies and techniques.
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