Master Rider Blog

Watch Out for Tech Stocks!

January 26th, 2008 admin

Despite my bearish view on the macros in my past few blogs, I feel that we should not miss out on short term opportunities (provided we can spot them).

Purely from chart point of view, tech stocks are poised to bounce strongly (from NOW onwards) and could last at least the next 3-5 trading days of course bearing unforeseen circumstances. Please see Nasdaq chart below:-

The Nasdaq has just formed the second base of a nice “W” shape. This is what we called a double bottom in technical analysis and is a strong signal for a reversal. Of course, nothing is 100% sure, what we can say is that the probability for reversal is very high when we see this signal. If we look at the SOXX index (see below chart) which is a leading indicator for tech stocks, it has a similar “W”

While I see this as a good short term trade, it does not indicate anything on the long term outlook. Hence, we shall not be too greedy and always remember to set a target price (set a trailing stop when positions already in profit) and a cut loss price (e.g. event risk). Never let your winning position to become a losing one.

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Entry Filed under: tech sector