Wednesday, July 20, 2005

Weekly naz chart just under resistance

As I mentioned earlier, I'm peeling off the longs into this rally. It should be pretty obvious why after looking at this weekly chart of the nasdaq. It is likely that a lot of other traders will also be selling at resistance on the naz near 2,225, but I'm sure CNBC will have the confetti coming down and the balloons going up and IBD will probably be getting all in a bunch over the "break-out" to new highs. At least thats how I remember it every other time over the last year and a half.

Anyway, my plan is to play the range drawn on the naz chart until it breaks one way or the other, then I'll do some real trend following, and my guess is it'll be on the down-side of the rising wedge that is forming.

Regular analysis of the major averages is one of the easiest and most important homework items I do, thats why I make posts like this periodically. I think my track record on market direction here at the blog is pretty good too, but today my friend Chris correctly pointed out that I'm usually pretty paranoid. I guess its because I'm still pretty scared of the potential volatility and gapping behavior in the kinds of stocks I prefer to trade.


At 2:20 PM, Anonymous Anonymous said...

Does this mean we are due for a correction ?

At 2:26 PM, Blogger jontait said...

I can't say for certain, but it does make the risk very high right now for any long positions. A big danger here is thinking that when the index makes a new high that we'll be "in blue skies".


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