Cup & Handle and Pullbacks
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 down 1 point and the Bond market trading down 5 ticks.
On the Cup and Handle List, Colgate Palmolive [CL>CL] formed an outside day and closed well today. This suggests that the handle is complete and the stock is poised to challenge its old highs.
On the Pullback List, several stocks look interesting to me. Ziff-Davis [ZD>ZD] closed well and is trading above its 20 day moving average which suggests that it is ready to resume its uptrend. Both State Street [STT>STT] and W W Granger [GWW>GWW] closed well. Verisign [VRSN>VRSN] is a Trend Knockout (“TKOâ€, where a strongly trending stock takes out (at least) the prior two days lows “knocking out†the weak hands and possibly clearing the way for the stock to trade higher) and may be worth considering, especially if it can take out yesterday’s high (the TKO day, around 122).
As you know, the Trading Where The Action Is List contains the most volatile stocks and is only for those traders who are willing to assume a high degree of risk in order to capture larger gains. With that said, both CMGI [CMGI>CMGI] and Ebay [EBAY>EBAY] have formed triangles at high levels. Watch for a breakout above for a possible buying opportunity or for the even more aggressive traders, a breakdown (failure) below the triangle for a possible shorting opportunity.
On the short side, Elan Corp. [ELN>ELN], on the Proprietary Implosion List, appears to be breaking down after a failed pullback.
Best of luck with your trading on Tuesday!
Dave Landry
Director of Research
TradingMarkets.com