Vacation Time?

On Tuesday, the Nasdaq opened slightly lower but began to rally. It then drifted while waiting on the Fed. After the announcement, it had a few head fakes and then sold off fairly hard.

Looking at the bigger picture, notice how persistent the downtrend has been over most of the summer (a). This has been a momentum swing trader's dream. However, now notice how it really hasn't gone anywhere as of late (b). This is a momentum swing trader's nightmare. Fortunately, my sophisticated drawing tools allow me to do this complex analysis. Please don't try this at home, unless of course, you have a 6-year old kid at your disposal and a straight edge.

The S&P appears to be bumping up against a resistance level.

So what do we do? It appears that the market remains vulnerable based on Tuesday's price action, a recent TRIN Reversal sell signal and the fact that we still remain in a longer-term downtrend. What concerns me is the fact that the indices are choppy and have been trading mostly sideways as of late. Therefore, it's probably not a bad idea to keep it light and let the situation develop. If you haven't gotten in your summer vacation yet, now may be a good time.

Looking to potential setups, the semis remain in a solid downtrend. Continue to look for shorting opportunities here.

Other

I wanted to thank those of you who came to my seminar and those who stopped to introduce themselves at the Online Traders Expo. It was great to meet you.

Best of luck with your trading on Wednesday!

Dave Landry

sentivetradingco@prodigy.net

P.S. Reminder: Protective stops on every trade!