Oversold
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
market’s opening. Therefore, overnight events may alter the
outcome of these observations.
Just a reminder, I’ll be speaking on Saturday
afternoon, October 14th at the TradingMarkets2000 First Annual Traders
Conference at the Venetian Resort, Hotel & Casino in Las
Vegas. I’ll also be available for a one-hour (or more) private workshop* to be held later
that day.
I’m pleased to announce that we recently launched the Trader’s
Galleria. Check it out, there you’ll find books, software, trading courses,
computers and just about everything else a trader needs to be successful. You
can even pre-order my upcoming book on swing
trading at a 20% discount.
On
Friday, the Nasdaq opened flat-ish (a) and after briefly trying to rally, it
resumed its downtrend. It did manage to mount a slight rally going into
the close but this appeared to be nothing more than short covering and wasn’t
enough to keep the index from closing poorly (b).
Unless we can get
some sort of indicator suggesting a bottom (i.e. a spike in the Vix), the May
lows (c) remain a likely target.Â
width=”470″ height=”320″>
These lows look more
like a chip shot on the weekly chart.
width=”470″ height=”320″>
So what do we do? This is one of those “damned
if you do, damned if you don’t,” oversold situations. If you get short, then the
market will bounce. If you go long, then oversold will become more oversold. So,
at the risk of preaching, look for opportunities on both sides but tread lightly
at all cost.
Looking
to potential setups, Polycom
(
PLCM |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, closed fairly well in spite of the overall tech wreck.Â
NPS Pharmaceuticals
(
NPSP |
Quote |
Chart |
News |
PowerRating), mentioned
Thursday night, still looks like it has the potential to resume its uptrend.
On the short side, Tellabs
(
TLAB |
Quote |
Chart |
News |
PowerRating),
mentioned Thursday and on the Pullbacks
Off Lows List, still looks vulnerable. Western Wireless
(
WWCA |
Quote |
Chart |
News |
PowerRating) formed a
bearish outside day down in a pullback on Friday. And, Clarus Corp.
(
CLRS |
Quote |
Chart |
News |
PowerRating)
looks poised to resume its meltdown.
Best
of luck with your trading on Monday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
Â