Where The Best Trading Stocks Are Found

  • August 7, 2002
  • Dave Floyd


The volatility continues. Yesterday, it was in the form of a
much-deserved rally for the bulls. Unlike most gap up openings, this one
continued to storm higher. This is why I feel that entering trades for the
opening print to fade the “gap up” or “gap down” is sometimes a crap shoot: You
simply do not know if there are more buyers and sellers, and, more importantly,
where the futures will be trading at the time you receive your fill. 

You are better off waiting for the stock to open, then feel it out before
committing capital. Are the S&Ps about to move in a direction that confirms
“fading” the gap? Is the stock holding the gap opening? That approach saved you
a bunch of dollars yesterday.

You could feel the intensity of the buying by looking at the tape early on. We
did have a nice pullback about 20 minutes into the session, and if you were
paying attention, it offered a great re-entry on the long side on most of the
major trading stocks. The pullback was exactly a 50% retracement on the high/low
for the day (first 20 minutes).  From there, the market shot higher. If you
loaded up, you were rewarded. From there, it got pretty choppy, by 8:00 a.m. I
was done for the morning.

The afternoon session
really did not offer a whole lot more until the last half hour, when suddenly,
people seemed to realize that the market is still grossly overvalued and
sold. (Actually, I have no idea why the market sold off, but is was an intense
sell-off with good institutional participation in the S&P futures pit.) That
late-day sell-off has presented us with some excellent intraday setups, all on
the short side. 

I have not seen this many quality setups in some time. Naturally, we need the
S&P and Nasdaq futures
to resume the downward trend, in order for these to pan out. A partial list is
seen below. Always use a protective trailing stop.


Potential IntraDay Shorts:

Bell South
(
BLS |
Quote |
Chart |
News |
PowerRating)

Goldman Sachs
(
GS |
Quote |
Chart |
News |
PowerRating)

Qualcomm
(
QCOM |
Quote |
Chart |
News |
PowerRating)

S&P Spiders
(
SPY |
Quote |
Chart |
News |
PowerRating)

Dell Computer
(
DELL |
Quote |
Chart |
News |
PowerRating)

PeopleSoft
(
PSFT |
Quote |
Chart |
News |
PowerRating)

So what should we be keying off of
today? Well, judging by the Semiconductors
(
$SOX |
Quote |
Chart |
News |
PowerRating), Banks
(
$BKX |
Quote |
Chart |
News |
PowerRating) and
Biotechs
(
$BTK |
Quote |
Chart |
News |
PowerRating) yesterday, it is safe
to say that rampant speculation has once again reared its head, that continues
to be where the best trading stocks are found.

Key Technical
Numbers: (futures)


S&Ps

 Nasdaq


**891**

881.5

878

868

858.75

855

845

**839**

835

 **968**

951.5

946

936

**924**

919

897

881.5

887.5

**866**

 

 

 

 

 

As always, feel free to send me your
comments and questions. See you in
TradersWire.


David