Foreboding Patterns In Indices
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.
Due to extenuating circumstances, David Landry
will be unable to write this column this evening. Dave should return on Monday,
November 27. Tonight’s piece is being written by TradersWire’s Duke Heberlein.
Same old song and dance with the markets Wednesday. No election results, down
open, market slides. Then manages to spike up on news before going back downward
into the close and ending with a whimper. Might be a good idea to take Friday
off if you don’t have a compelling need to trade for those of you who only work
the long side. Despite the fact that the markets are oversold and due for a
bounce, markets often can and will remain oversold for several days. I’m still
inclined to look more closely at the short side for Friday, as both the S&P
(
SPX.X |
Quote |
Chart |
News |
PowerRating), which has formed a low-level head-and-shoulders, and the Nasdaq
(
COMPX |
Quote |
Chart |
News |
PowerRating)
are showing bearing-looking formations.
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So where do we go from here? Based on what I see tracing out in
the indices, it appears to me that despite the oversold conditions, the path of
least resistance for the markets remains biased to the downside. Keeping that in
mind, I would focus on the short side and keep a couple of the strongest
performers in the bullpen in case we do happen to get a bounce on Friday.
With that said, Nortel Networks
(
NT |
Quote |
Chart |
News |
PowerRating) is forming a pullback
and appears to have another push to the downside left in it.
Capital One Financial
(
COF |
Quote |
Chart |
News |
PowerRating), from the Proprietary
Implosion List, is setting up into a simlar pattern.
CacheFlow
(
CFLO |
Quote |
Chart |
News |
PowerRating), from
the New 60-Day Lows on Double Volume List, gapped down on the open Wednesday
and has now lost 80 points in the past five trading sessions. While possibly
overextended to the downside, don’t try to catch the proverbial falling dagger,
and if the trend continues, go with it. Aether Systems
(
AETH |
Quote |
Chart |
News |
PowerRating), off the same list, broke
down from a low-level head-and-shoulders pattern–look for continuation if the
market continues to weaken Friday.
In the event the market does turn and stage a bounce, Tricon
Global Restaurants
(
YUM |
Quote |
Chart |
News |
PowerRating), off
the Proprietary Momentum List, is trading in an outside day at its highs.
Cintas
(
CTAS |
Quote |
Chart |
News |
PowerRating), from the same list, has taken out its old highs after
rallying out of a pulllback. It has been a strong performer recently on both up
and down days, so it could be one of the first to run if the market does turn.
Have a great Thanksgiving holiday!
P.S. Protective stops on every trade!