Of Forrest Gump and David Byrne
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
markets opening. Therefore, overnight events may alter the
outcome of these observations.
On Thursday, the Nasdaq lapped lower (a) and after a brief
rally, resumed its downtrend. This action has it closing on its low (b). It
looks like the recent lows (c) are a chip shot from here.
This is how a bear acts–up in the morning and down in the
afternoon.
Well, our retrace rally is officially over. It’s a shame
that all we got was two days. But, you know how the market is–like a box of chocolates–you’re
never sure what you’re going to get. The good news is, protective stops
and trailing stops helps to accommodate for this uncertainly.
So what do we do? I’m afraid it’s back to “same
as it ever was”: stay defensive on the long side and consider a short or
two.
Looking to potential setups, USA Education
(
SLM |
Quote |
Chart |
News |
PowerRating),
mentioned Wednesday night, still looks like it has the potential to rally
out of a two-step pullback.
For you breakout players, Winn Dixie
(
WIN |
Quote |
Chart |
News |
PowerRating),
also mentioned Wednesday night, rallied nicely on Thursday and is just shy of
taking out its recent highs. Just don’t overstay your welcome as
there is longer-term overhead resistance here.
On the short side, Globe Span
(
GSPN |
Quote |
Chart |
News |
PowerRating),
mentioned recently and on the Pullbacks
Off Lows List, still looks vulnerable.
For those looking to an alternative to the Q’s (Nasdaq
HLDR’s), the Technology Spyders
(
XLK |
Quote |
Chart |
News |
PowerRating) look poised to resume their
longer-term downtrend.Â
Continuing on the short side, Idec
Pharmaceuticals
(
IDPH |
Quote |
Chart |
News |
PowerRating), on the Stocks
Crossing Below Their 50-day Exponential Moving Averages on Double-Volume List
(I get carpel tunnel every time I have to type that indicator), looks poised to
break down out of a high level inverted cup and handle looking formation.
Best
of luck with your trading on Friday!Â
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
P.P.S. Due to a scheduling conflict, I won’t be writing this piece Friday
night. And, on Friday, I can assure you that no one will plug
my my upcoming book
on swing
trading at a 20% discount.
.