Swing Trading BLOG – Swing Trading BOOT CAMP

After returning to the recent high last week swing traders watched as the Dow Jones Industrial Average sold off this week.

Right from the opening bell on Monday the sellers came out in a big way.

By weeks end the selling pressure had us looking at one of the worst weeks since the summer.

This did NOT happen without warning though.

Last week we pointed out the some of the recently strong sectors were showing signs of "losing steam".

The Tech sector had stalled causing the tech heavy NASDAQ to stall right along with it.

We said that we would need confirmation to validate a move higher or lower and that the NASADAQ could be a catalyst.

This week we watched the confirmation come almost from the get go on Monday.

The GAP DOWN had us looking to the SHORT SIDE by days end.

This was the price action clue that we were looking for.

The move lower on Tuesday on increased volume was all we needed to know that the next move lower was upon us.

Here is the chart of the QQQ…

The transition from bullish to bearish that we saw this week brings the market back down near the 50 day EMA.

The DJIA and S&P and basically hugging the 50 day while the weaker NASDAQ has now traded below it.

This latest move has people wondering a bigger sell off isnt right around the corner.

There are some sectors still showing strength.

The Financials and Homebuilders are (as of now) holding up.

The Energy and Oil ($XLE $OIH) sectors are trading sideways despite the market pushing lower.

Look for a breakout (or breakdown)in these two sectors in the near future.

One weak sector we mentioned a few weeks ago was the Semiconductors ($SMH).

Notice the relative weakness prior to the sell off this week.

A good place to look for SHORTS wouldn't you say?

Gold and Silver ($GLD $SLV) are holding up BUT…

After last weeks down move the market and a few of these sectors are in short term oversold territory.

We could see the buyers step in here very soon to protect their long positions.

The SHORTS may also look to cover and take some profits.

All that being said expect a stall or even a bit of a bounce.

Now that we have seem some weakness in the market it is important to have a complete watch list.

Look through the charts and put together a list of stocks that are weaker than the market.

Put those with the best chart patterns on your SHORT watch list.

Look for stocks that are holding up well doing this recent down move.

Put those with the best patterns on your LONG list.

Once the market lets you know where it is headed next take the appropriate action.

Until next week…Good Trading to YOU!