Keep an Eye on Them
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 1.2 points higher and the Bond Market Futures is up 1 tick. Also, please be aware, the June S&P futures [SPM9>SPM9] went out 5 points below fair value signifying a possible down bias for the opening.
In Monday’s trading outlook, I pointed out that Visx Corp. [VISX>VISX] was an interesting pullback. Let’s take a look at why I mentioned the stock. Referring to the chart below, the stock, which has been in a strong uptrend, began to pullback (A). It then closed well (B) on an increase in volume (C) (both of these statistics are reported each day next to the stocks on our Pullback List). This increase in volume combined with a strong close on Friday suggested that the stock was poised to resume its longer term uptrend.
VISX . Notice that VISX, a stock in a strong uptrend, pulls back (A) and closes well (B) on heavy volume (C). This suggested that the stock was poised to resume its uptrend. Source: Omega Research.
On the Pullback List several stocks look interesting to me tonight. Boston Scientific [BSX>BSX] closed well and appears to be headed back in the direction of its bigger picture uptrend. Novell [NOVL>NOVL] recovered from an earlier sell off today and closed well. Finally, Infoseek [SEEK>SEEK], a highly volatile stock that should only be considered by the most aggressive traders, is a loosely formed cup and handle.
For you breakout players, both the Oils [$XOI.X>$XOI.X] and Oil Service [$OSX.X>$OSX.X] sectors broke out decisively to new highs today. Look for related stocks on the New 60-Day Highs on Double Volume List such as Anadarko [APC>APC] and Baker Hughes [BHI>BHI].
On the short side, Metzler Group [METZ>METZ] ignored today’s rally and sold off and Bellsouth [BLS>BLS] is an inverted cup and handle pattern.
Best of luck with your trading on Tuesday!
Dave Landry
Director of Research
TradingMarkets.com