Trading Tomorrow Will be Difficult
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.
At the time this is being published, the S&P Globex Futures are trading 7.40 points lower and the bond market is trading up 5 ticks.
Although we have more indicators pointing higher than lower on tonight’s Market Bias Page, I’d continue to use caution on the long side (or either side for that matter with recent volatility!).
Jeff Cooper and I were talking after the close. We both agreed that trading tomorrow will be difficult at best. Those set-ups that look interesting on the long side will probably get creamed as today’s action catches up to them. On the other hand, those set-ups that look interesting on the short side will probably rally on relief. With that said, below is what looks most interesting to me for tomorrow.
Nanogen [NGEN>NGEN] sold off earlier today but recovered to close well suggesting its parabolic uptrend may still be intact. Crown Castle Communications [TWRS>TWRS], in the recently hot Telecommunications Sector [$XTC.X>$XTC.X], seems to be finding support just under 30 (a) and looks like it has the potential to resume its strong uptrend.
After a day like today, I like to see what held up well. Therefore, I tend to pay more attention to the Proprietary Momentum List. With that said, Globalstar Telecom [GSTRF>GSTRF] closed well today and looks poised to continue its fast break upwards and Disney [DIS>DIS] broke to new 6-month highs on an expansion of range and volume today.
As you know, the Trading Where The Action Is List contains the most volatile stocks and is only for the most aggressive traders who are willing to assume a higher degree of risk in order to capture larger gains.
With that said, Intraware [ITRA>ITRA] held up relatively well (for a volatile stock that is) and my have one attempt at old highs left in it. Verty [VRTY>VRTY] appears to be failing at the 50-day exponential moving average (creating a possible shorting opportunity).
I’m often asked to follow up on stocks that I’ve recently mentioned. With that said, Red Hat [RHAT>RHAT], mentioned on 12/23/99 (see archive), seems to be stalling out right at the neckline (a) of a head and shoulders pattern. Look for a shorting opportunity here on any continued weakness.
On the short side, Gateway [GTW>GTW] on the Implosion 10 Technology List, is failing at the 50-day exponential average and American Home Products [AHP>AHP], mentioned recently, still looks vulnerable to me.
Best of luck with your trading on Wednesday!
PS – Reminder: Protective stops on every trade!
PPS-Oh, looks like the bond market does matter again (see archive from last night re: the new “paradigmâ€).