Be Prepared
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.
A friend of mine is one of the best stock traders I know. In fact, his track record over the past 10 years has been phenomenal. I was discussing some of my recent trades with him. I showed him some stocks I shorted. At this point, he told me that he has never shorted a stock. Now you can’t take away what he has achieved but you have to wonder if his performance will continue going forward especially with the market showing some signs of distribution and the P/E on the NASDAQ higher than the Nikkei’s just before the Japanese crash. My advice? Don’t fight the tape (I sincerely hope we have another 10 year bull market) but learn how to short just in case (see the article on how to short stocks in our Traders Learning section).
On tonight’s Pullback List, two stocks in the strong Internet Sector [$DOT.X>$DOT.X] look interesting to me: Open Market [OMKT>OMKT] is consolidating at higher levels and looks poised to challenge its old highs and Internet Initiative Japan [IIJI>IIJI] has pulled back from a fast move upwards.
Cybergold [CGLD>CGLD], on the Internet Fab 5 List, is in a fast move. It’s way too extended now but it may be worth watching going forward to see how it acts during its first pullback.
Autodesk [ADSK>ADSK], mentioned last night, appears to be rallying out of a pullback/flag.
For you breakout players, MRV Communications [MRVC>MRVC], mentioned last night and on the New 60-Day Highs on Double-Volume, broke to new highs out of a pullback formation on an expansion of range and volume today. Real Networks [RNWK>RNWK], also on the list, broke out of a mini cup consolidation on an expansion of range today (a).
On the short side, Antec [ANTC>ANTC], mentioned over the past two nights, still looks like it has the potential to resume its meltdown. NCO Group [NCOG>NCOG], on the Proprietary Implosion List, is a similar pattern.
Best of luck with your trading on Monday!
PS – Reminder: Protective stops on every trade!