Pullback Time
I am not a big pullback trader, but today seems to be a pullback day, so why
do we not take a look at a few setups? There was a significant pullback in some
of the big names yesterday, but many quickly rebounded, including Sun
Microsystems
(
SUNW |
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PowerRating).
Today’s Update:
(
WCII |
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PowerRating)
Winstar Comunications
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WCII |
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PowerRating) broke
through Wednesday’s low, which was a potential short entry point. Remember to
trail your stops.
Today’s Watchlist:Â
(
LWIN |
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PowerRating),
(
SLR |
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PowerRating),
(
ALGX |
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PowerRating)
Leap Wireless
(
LWIN |
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PowerRating) is an example of
a pullback. It retraced to a near-term support level for the second time
following its low-level breakout on Thursday. Depending on the price action of
the stock, it could be either a short or long play. If the stock bounces off
this level, watch for a move above the recent highs to offer a long opportunity.
This may just a flushing out of the weak hands. On the other hand, a close below
support may offer the aggressive trader a short opportunity. I say aggressive
trader because it may be somewhat choppy on the way down.
Solectron
(
SLR |
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PowerRating) tested
a high on Wednesday and is showing an inside day on Thursday. If it holds up,
watch for another move above the high to offer a long opportunity. The volume on
Wednesday was news driven, but still, many shares traded hands, so the support
and resistance levels are still affected. The stock has been making a series of
higher lows on each “major” pullback, which is also somewhat positive.
When trading this stock, keep in mind that it is not a high flyer, so it will
not move like SDLI. In many cases, that’s much easier.
Allegiance Telecom
(
ALGX |
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Chart |
News |
PowerRating) looks like
it is breaking down from a bearish flag formation. Thursday is the first
potential closing move outside of the range. If it closes below the bottom
trendline, look for a continuation move on Friday. The strong volume on Thursday
suggests that more trouble may be coming. If you take a short position, look for
support near 40.
Until later,Â