Be Prepared

Posted by downtowntrader | 6/04/2006 10:17:00 PM | 0 comments »

The Nasdaq reversed after testing the 200 day sma and 38.2% Fibonacci retrace on Friday. The Nasdaq is vulnerable here considering it has been the weakest of the indices, however, if it can retake the 200 sma, some bulls may get excited and take it to the next Fib levels. The Nasdaq / SP500 ratio is at a pretty low level and the SP500 looks like it has more room to the downside so there is a chance the Nasdaq can retake leadership if we are gonna have a rebound. The key here is too not try and get too fancy trying to predict where things will go. Keep an eye on support and resistance, and have a plan for multiple scenarios. The best traders are prepared well in advance so that all they have to do is react to what is unfolding and not try to analyze a hundred indicators during trading hours.
Here is a chart of the Dow. Bulls need to be careful at how it works its way up here as it could be resolving into a Head and Shoulders topping pattern.
Here is the Russell and it may be setting up to be shorted. Here is a doji at a possible resistance area.
Gold is looking like it is trying to halt the declines here. However, it looks like it will need to consolidate for a while before any meaningful move begins. We are probably looking at a near term bounce and then some consolidation.
Silver is looking like it is finding a bottom here as well. It appears to me that Silver will regain the leadership from Gold on the next leg up.
While GG has retraced much of the prior breakout, no serious chart damage has occurred and it is retesting support here.
JOYG looks like it may be setting up for a drop here. Watch to see how it handles resistance here.
ADS was highlighted last week here and it is looking like it will test it previous high. Watch for a breakout.
BHI has been showing some strength and they cleared resistance Friday.
CSX looks like it will test the upper end of this trading range.
DXPE is waging a battle here with different news releases tugging on the stock. Watch for a clear break of this trading range.
IBCA is still looking decent here as long as it can hold it's breakout area.
ODFL looks like it is clearing a bull pennant here.
NSSC may be clearing a retracement channel. If it is successful it should head to the previous high.
TTI is possible breaking out of a triangle here and indicators are looking good.
XPRSA is a thinly traded stock that likes to trade in these triangle bases. Watch for a breakout here.

It's strange to see this many decent chart setups in the IBD stocks when the Russell Index is not looking as good. Either we will see a bunch of failed breakouts or the Russell will continue to bounce. Keep your stops tight and be prepared for both outcomes.

Good Luck,