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Yes it’s Monday, already. Continue to watch for light volume and abnormally
large spreads. While swing traders may hate this type of trading, daytraders may
love it. Four of my favorite daytrading days are the days before and after
Christmas, as well as the days before and after Thanksgiving. Not only do we get
off early, but there’s opportunity everywhere. Use
caution when entering continuations today, because the volume will be thin.
As for the techs, where do we stand? We are still trading near the top of the
near-term consolidation. I like consolidations because it’s easier to see a
breakout. My readers will notice that I prefer to play breakouts and breakdowns
than to try to
catch momentum. The only momentum trades that I tend to initiate are pull-backs from highs
or lows, where I look to enter on a continuation of the bigger-picture move.
I’ll leave you with a thought for the short-day. Over the weekend I was
looking at some new setups, and what I notice about all of them was that they
were a combination of a near-term pattern and a longer-term pattern. You’ll
often hear me say that my favorite trades are a combination of trendlines, and
this is just another perfect example.
There will be no Trading the Techs PM due to the early close.
Today’s Lesson
(
LLY |
Quote |
Chart |
News |
PowerRating)
The reversal is another one of my
favorite patterns. Something you’ll notice about all of my favorite patterns is
that they are simple, and that there are only a few criteria that need to be
met. Look at the early morning volume spike followed by the break down below the
opening price.
Today’s Watchlist:
(
ISLD |
Quote |
Chart |
News |
PowerRating),
(
SNPS |
Quote |
Chart |
News |
PowerRating),
(
SGNT |
Quote |
Chart |
News |
PowerRating),
(
GNSL |
Quote |
Chart |
News |
PowerRating),
(
TLGD |
Quote |
Chart |
News |
PowerRating),
(
DPAC |
Quote |
Chart |
News |
PowerRating)
Digital Island
(
ISLD |
Quote |
Chart |
News |
PowerRating)Â was
added to the Watchlist on Friday, and we set our alerts just over 50. On Monday
it broke out to the upside. Daytraders may have already caught a move about the
breakout level. Swing traders should watch for a continuation above Monday’s
intraday high, assuming it closes above 50. While we can expect weak volume
today, but a continuation should be on strong volume.
Synopsis
(
SNPS |
Quote |
Chart |
News |
PowerRating) has been consolidating near its low for the
last three days. After breaking support on very strong volume, it continued to
test its lows. The action following the large decline appears to be nothing more
than a dead cat bounce. Set your alerts just below 34 and watch for a
volume-backed potential short. The conservative trader will look for an entry
following the break down day.
Sagent Technology
(
SGNT |
Quote |
Chart |
News |
PowerRating) broke out from a low-level
consolidation on Thursday on news. With the next resistance level still 3 points
away at 17 1/2, we’ll add Sagent to the Watchlist. History has shown us that
stocks tend to move from one resistance level to the next. Look for an entry on
a pullback. In a retracement, look for former resistance to become support.
Genome Solutions
(
GNSL |
Quote |
Chart |
News |
PowerRating) broke out above its all-time high
intraday on Monday. Watch for a close above 17 3/4 on Monday followed by a
continuation move on Wednesday. If it closes above this level, set your alerts
roughly 1/4 point above the intraday high of the breakout day.
We took our most recent look at Tollgrade Communications
(
TLGD |
Quote |
Chart |
News |
PowerRating)
early last week. It continues to travel along its uptrending channel. Keep
watching for entries on bounces off the bottom of the channel. The volume has
been strong since it entered this near-term trend, so we should watch for
continued volume strength. If the volume does start to die, it may be a
foreshadowing of things to come.
Dense-Pac Microsystems
(
DPAC |
Quote |
Chart |
News |
PowerRating) broke out from a low-level
consolidation last week and has shown a continuation move intraday on Monday. It
looks like the volume is on track to be quite strong, so traders may want to
look for potential entry points. Use the lows of the last three days as a
near-term trendline, and to help with initial stop placement.Â
Until Wednesday,