Amgen and IBM down
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 7.10 points lower and the Bond Market Futures are trading up 4 ticks.
Heads up, after the close IBM [IBM>IBM] announced worse-than-expected earnings and a Y2K warning going forward. American Online [AOL>AOL] beat earnings estimates but not significantly (at least in the eyes of the street). And finally, Amgen [AMGN>AMGN] announced worse-than-expected earnings. The stocks are trading down 12 5/8, 4 and 7 1/8 points respectively in early Instinet after hours trading. This will likely weigh heavy on the market tomorrow.
Tonight, I thought it would be interesting if I showed you why I picked Broad Vision [BVSN>BVSN] from last night’s Pullback List. The stock was in a strong uptrend and began to pullback. It then formed a pivot high in the pullback. This is a pattern I call a Trend Pivot (false rally) Pullback. The theory is the one day false rally (pivot point, a high surrounded by two lower highs) draws in and subsequently shakes out the “fast moneyâ€-those with very little patience and/or buying power. This often clears the way for the stock to trade higher especially when it takes out the pivot high.
Ask Jeeves [ASKJ>ASKJ], a stock I’ve mentioned lately (see archives), still looks like it has the potential to rally out of a big picture cup and handle formation especially if it can take out yesterday’s pivot high (a).
MTG Investments [MTG>MTG], on the Pullbacks List, appears to have pivoted back in the direction of its uptrend.
Tonight we updated our Cup and Handle List. I especially like Xoom.com [XMCM>XMCM] and CMG Inc. [CMGI>CMGI], in the strong Internet Sector [$DOT.X>$DOT.X], which both appear to be rallying out of their handles. Just wait for follow though to the upside in light of the action in AOL tonight.
For you breakout players, Glaxo Wellcome [GLX>GLX], mentioned over the past few nights and in the strong Drug Sector [$DRG.X>$DRG.X], formed an inside day today and looks poised to continue its breakout from a cup and handle formation.
On the short side, Raytheon [RTN.B>RTN.B], on the Pullbacks From Lows List, looks poised to resume its meltdown. Just use caution on this one as it is also on the Trading Where The Action Is List. RF Micro Devices [RFMD>RFMD], on the Below 50-DEMA-DV List, appears to be breaking down out of a big picture double top formation. Just wait for it to continue to “prove†itself by taking out today’s low.
Best of luck with your trading on Thursday!
Dave Landry
PS – Reminder: Protective stops on every trade!