Balance Confidence and Humility
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.
Monday will likely be thin trading as many extend their holiday. Consider this if you decide to trade.
I thought it would be nice if I wrote some eloquent words of wisdom for you to ponder over the long holiday weekend. Unfortunately, I was unable to come up with anything. Frustrated, I pulled out my torn, tattered and dog-eared copy of Market Wizards. The first page I opened it to was a passage I had underlined years ago by Michael Steinhardt. At this point, I realized I would have to look no further. It reads:
“Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. You need to believe in something, but at the same time, you are going to be wrong a considerable amount of times. The balance between confidence and humility is best learned through extensive experience and mistakes. There should be a respect for the person on the other side of the trade. Always ask yourself: Why does he want to sell? What does he know that I don’t? Finally, you have to be intellectually honest with yourself and others. In my judgement, all great traders are seekers of truth.â€
And now for something completely different. Has anyone seen the Biotechs [$BTK.X>$BTK.X] lately? The whole sector is in a parabolic move higher. I really hate it when someone tells me that a sector is about to become the “next internet†but it sure looks like these guys are taking off. Based on this, I just finished printing off all of Paul’s articles (Dr. Ruggieri) from the Medical Industry Insight page. My homework for this weekend (lets face it, how much family can you take?) will be to re-read them and chart the stocks. I suggest you do the same.
On the Pullbacks List, Sun Microsystems [SUNW>SUNW] looks like it has the potential to make another run at its old highs and Pacific Internet [PCNTF>PCNTF] looks poised to break out of a triangle.
For you breakout players, Osicom Technologies [FIBR>FIBR], on the Proprietary Momentum List, broke to new highs on an expansion of range out of a sideways consolidation today. Mederex [MEDX>MEDX], a Biotech and on the New 60-Day Highs on Double Volume List, broke to new highs on an expansion of range and volume today. Look for a buying opportunity on this one or better yet, wait for the next pullback.
Talk City [TCTY>TCTY] on the Trading Where The Action Is List, is consolidating within Tuesday’s wide range day and looks poised to break higher.
On the short side, PNC Bank Corp. [PNC>PNC], on the Proprietary Implosion List, is compressed and looks poised to expand lower once again. Real Networks [RNWK>RNWK] on the Below 50 DEMA-DV List, appears to be breaking down out of a head and shoulder formation. Speaking of head and shoulders, has anyone seen Red Hat [RHAT>RHAT]? This looks like a textbook example. Just wait for the neckline to be broken decisively before getting too bearish though.
BTW, Today I got a peek at the new website layout (scheduled to go live sometime in January). In a word, fantastic. Easier to navigate, more indicators, more markets, more stock search engines, more content and a few new “facesâ€.
Best of luck with your trading on Monday!
PS – Reminder: Protective stops on every trade!
PPS- ENJOY YOUR HOLIDAY!!!!!!!!