Wednesday, February 17, 2010

Markets overbought short-term!

The markets are very extended here and seem ripe for a pullback even if only one day. If you are already long stocks (for swing trader but especially position traders) sit tight. However, if you are in cash my suggestion here for new positions is to shorten time frames to a day or less; use tighter stops and consequently much close targets and/or look for short set ups. The markets will likely pullback and offer much better "multi-day holding" long side opportunities. Here is one potential short set up I like for a quick trade with a tight stop if the markets start pulling back here.

CYD is currently pulling back into heavy resistance in the $15.60 - $15.50 zone. If the markets pullback from here CYD could possibly drop to the $12.00 area making for a potentially nice short trade.

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