CPI Scheduled for Release
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 2.50 points lower and the Bond Market Futures are trading down 5 ticks.
Heads up, tomorrow the CPI is scheduled for release. The well watched and anticipated number will likely cause extreme volatility in early trading in the stock and bond markets.
Tonight we have 3 indicators pointing higher and an oversold McClellan Oscillator on the Market Bias Page. This suggests an upside bias for tomorrow. However, if we get a bad CPI then all bets are off. Therefore, wait for some follow through to the upside before getting too bullish.
As you know, lately I’ve been on the “follow up†theme*. Today, Ask Jeeves [ASKJ>ASKJ], mentioned over the past few nights (see archives), sold off (a) but recovered to close well (b). This action suggests that its bigger picture bullish cup and handle (c) is still intact.
On the other hand, JDS Uniphase [JDSU>JDSU], mentioned last night as a pullback, sold off and closed poorly (a). This action suggests that strength from the recent breakout (b) may be weakening as the stock has come all the way back to the breakout point. This stock should be avoided unless it can recoup all of today’s losses (i.e. rally above its prior 1-2 bar highs).
Aironet Wireless Communications [AIRO>AIRO], mentioned last night and on the Pullbacks List, still looks interesting to me.
Glaxo Wellcome [GLX>GLX], on the Proprietary Momentum List, closed well today and looks poised to rally out of a cup and handle formation.
For you breakout players Phone.com [PHCM>PHCM], on the Proprietary Momentum List, formed a bullish outside day in a pullback and closed just shy of all time highs. Just use caution as this one is also on the Trading Where The Action Is list.
On the short side, Apache [APA>APA] and Anadarko [APC>APC], on the Pullbacks From Lows list and both in the weak Oil Group [$XOI.X>$XOI.X], appear to have resumed their downtrends.
Best of luck with your trading on Tuesday!
Dave Landry
PS – Reminder: Protective stops on every trade!
*See this week’s Q&A for an example on tracking stocks after a pattern occurs. Keep those great questions coming. Send them to questions@TradingMarkets.com.