Tonight’s Set-ups
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 3.40 points lower and the bond market is trading up 1 tick.
Purchase Pro [PPRO>PPRO], on the Pullbacks List, is a pattern I call a Trend Knockout (TKO). This is where a strongly trending stock sells off and takes out (trades below) the prior two lows (a). This often “shakes out†the weak hands and clears the way for the security to trade higher.
Red Hat [RHAT>RHAT], on the Pullbacks List, rallied sharply today (a) reversing Friday’s sell off (b). This suggests the stock will resume its uptrend and possibly challenge its old highs*.
Portal Software [PRSF>PRSF], mentioned last night, looks poised to rally out of a triangle formation.
For you breakout players, Vari-L [VARL>VARL] broke to new highs on an expansion of range today out of a triangle formation. ISS Group [ISSX>ISSX], on the New 60-day Highs on Double-Volume List, formed a bullish outside day at new highs today.
On the short side, Unicom [UCM>UCM], on the Pullbacks From Lows List, closed poorly today and looks poised to resume its strong downtrend. Adobe [ADBE>ADBE], on the Implosion 10 Technology List, appears to be breaking down on increased volume at the 50-day exponential moving average.
Best of luck with your trading on Tuesday!
PS – Reminder: Protective stops on every trade!
*I realize that this one is expensive and extremely volatile but feel it’s a worthy example and fun to watch.