Trader Mike

There was a whole lot of technical damage done on Thursday and Friday. Those days also provided some great trades if you were willing to go short. I think I get some kind of perverse pleasure out of shorting. I almost never look to buy stocks that are in extended slides but put a chart of a parabolic rally in front of me and I’m watching like a hawk for a chance to short it. The metals stocks provided some nice trades and I’ll continue to watch them for entries after they retrace a bit.

Here’s the Nasdaq which was down 4.22% this week. I guess I wasn’t so far off yesterday when I said it was headed for its 200-day moving average. My guess is that the Nasdaq will hit that moving average early next week and then snap back. But I sure wouldn’t be initiating any shorts after a 4% drop and with it being so close to the 200 DMA. I’d look to reload on shorts once it gets out of oversold territory.

The Nasdaq 100 (NDX / QQQQ) entered official bear territory today by dropping under its 200-day moving average. The index is now down 0.54% for 2006. That’s not surprising given all those big cap tech laggards. Here’s the chart: