Boom! Boom! Out Go The Lights
With the Nasdaq Composite lifting off this morning on the heels of positive earnings and outlooks from
technology firms
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Today’s strong open and subsequent rally was telegraphed immediately after yesterday’s close when networking equipment maker, Juniper Networks, posted impressive results for its Q4 and raised its revenue growth guidance for the 1st quarter. In addition, chipmakers Linear Technology Corp and AMCC reported strong earnings and positive outlooks for the March quarter. Add to this
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However, the early explosion in the Nasdaq gave way to afternoon profit taking as the Fed Beige book released late in the day apparently created some uncertainty as to the current state of the economy. The Beige Book clearly stated that noticeable slowdowns in manufacturing, residential building, and other areas of the economy were evident in numerous areas which were examined. Speculation and assumption giveth, and it taketh away.
As clearly displayed on the 60-minute chart of the Nasdaq Composite shown below, the expanding volatility triangle I pointed out several days ago continues to grow.Â
Today, we again rallied up to the upper regression line of the triangle and fell back. In fact, the Nasdaq Composite closed nearly 75 points off its intraday high.
Until this upper regression line is exceeded with authority, we will continue range bound within the boundaries of this triangle. In addition, you can notice the small gap down from 12/15 which, perhaps coincidentally, posed additional resistance at the 2700+ area.
After market, IBM has just reported earnings which are being viewed as favorable and is trading up considerably.
The
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Lots of technology looks very extended here, having racked up nearly 40%-50% gains in the past 5-6 sessions.
Stocks like
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Long Watch: Can you buy something up 60% in a week if it “looks good”? If you are quick enough to scalp it or play the continuation, trading will become increasingly treacherous as Friday’s expiration approaches.
Short Watch: Brokers such as
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MER |
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Goran