Some of the old Net stocks continue to form promising-looking bases. Two days ago on August 15, 2000, I talked about how the Internet HOLDRs has been forming a base for the past three months following the the March/April shakeout. I stated that this base building looked a lot like what we saw in many biotech stocks over the course of April, May, and June prior to their explosive breakout.

If you’re newcomer to trading, there is one piece of advice that practically all successful traders will tell you at some point:

Net stocks have captured the attention of institutions and individual traders over the past two sessions. That has lifted indices that track Net stocks from their lows.

Up until now I have resisted the temptation to talk about the widely watched diamond formation in the Dow.

In my August 10, 2000 piece, I talked about how important it is to keep track of stocks that are exhibiting strength in a weak market. That way, you’ll have a potential list of long-side candidates if the market stages a recovery.

When a market is looking weak, you always have to read and interpret what all the technical clues are saying.

This daily chart of the Securities/Broker Dealer index [XBD|XBD] shows an interesting example of three patterns within a pattern.

Today we saw the fourth day of positive follow-through off August 3, 2000’s reversal in Extreme Networks [EXTR|EXTR]. 

Even before the dawn of the “momentum trader era,” traders had spent much of their time pouring through charts of stocks with strong established trends.

One of these days, if I ever have to rename this column, I’ll probably call it “Trading Confluence” because this is probably the most commonly recurring theme in how I view the markets.