Is The Bear Dead Or Just Wounded?
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.
On Tuesday, the Nasdaq gapped higher (a) and after a brief,
slight early-morning pullback, was off to the races for a solid trend day
higher. This action has it closing on its high (b).
For those keeping score, this was both the largest one-day
percentage and point gain ever.
Tuesday’s action is encouraging, I see no reason to call an end to the bear
market. Any market can have a sharp rally off of lows as bottom-pickers
rush in and bears scramble to cover. Follow-through will be key. If this is the
real deal, we will have plenty of opportunities on the first pullback after the
thrust from lows. Be patient and wait for your setups.
Looking to potential setups, General Dynamics
(
GD |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, looks like it has the potential to rally out of a two-step
pullback.
Tricon Global
(
YUM |
Quote |
Chart |
News |
PowerRating), mentioned Monday night and on the Pullbacks
Off Highs List, still looks like it has the potential to resume its uptrend.
On the short side,
Sealed Air Corp.
(
SEE |
Quote |
Chart |
News |
PowerRating), mentioned Monday night and on the Implosion
10 Technology List, still looks poised to resume its recent meltdown.
Xilinx
(
XLNX |
Quote |
Chart |
News |
PowerRating), also on the Implosion
10 Technology List, was up on Tuesday but still looks vulnerable.
Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating),
mentioned recently, continues to rally from lows but remains in a weak position.
As always, wait for resumption of the downtrend before attempting a position.
Random Thoughts
Someone on
television recommended buying the Q’s this morning–which turned out to be a
good call. However, what concerned me is that she admitted that she already held
them and had “bought them at 100.” Based on recent lows, this position
has gone more than 39 points against her. In order to get back just to breakeven, the
market would have to rally over 64% from these lows.
Never, never,
never let this happen to you. Use a stop.Â
Best
of luck with your trading on Wednesday!Â
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
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