Little Ripples, Not Big Waves

  • July 11, 2000
  • Dave Baker

Intraday Example

In Trading the Techs AM I mentioned the
morning reversal in the Nasdaq futures. Let’s take a look at how it played out.

A trader could have taken a position on a move above the morning high and
exited on the short-term trend break.

Today’s Tech
Watchlist: 
(
GENZ |
Quote |
Chart |
News |
PowerRating),
(
ADRX |
Quote |
Chart |
News |
PowerRating),
(
YHOO |
Quote |
Chart |
News |
PowerRating)

Genzyme
(
GENZ |
Quote |
Chart |
News |
PowerRating) broke out to new
highs last week on strong volume. On Tuesday we see an inside day, following
another new high set on Monday. Look for the near-term uptrend to continue.
Consider possible entry points on a bounce off a retracement to the near-term
trendline. As always, watch for a pullback following any three-day runup.

Andrx
(
ADRX |
Quote |
Chart |
News |
PowerRating) broke out to a new high on Friday and put
in a continuation move on Monday. As usual, we’ll watch for a three-day runup.
Should it continue higher for more than three days, we’ll then look for a
five-day move. Watch for strong volume to help maintain the near-term trend. A
more conservative entry point would be to watch for a retracement of 50% from
the current move back to the breakout level, which is more my style. I prefer
to either catch the initial move, the continuation move, or consider a potential
entry based on a bounce off a retracement. I do not like to enter a stock
because I feel it’s in a trend, I consider that too speculative.

Because the Internet group has been so weak lately, it’s
important to take a look at some potential short setups in this category.

Yahoo!
(
YHOO |
Quote |
Chart |
News |
PowerRating) broke down below support on Tuesday with a
power downward gap. Watch for a continuation move below Monday’s intraday low to
provide potential shorting opportunities. Be aware that there may be
psychological support near 100. Thus, a volume-backed move below this level
could be an indicator of things to come. Note the strong volume combined with
Yahoo!’s price action on Tuesday.

Today’s Non-Tech
Watchlist: 
(
PFE |
Quote |
Chart |
News |
PowerRating),
(
MER |
Quote |
Chart |
News |
PowerRating)

As I mentioned on Monday, I’ll be adding the occasional non-tech potential
setup to the column.

Pfizer
(
PFE |
Quote |
Chart |
News |
PowerRating) broke out to a new near-term high intraday on Tuesday. With
the all-time high not far off at 50 11/256, we’ll watch for it to approach this
key level. Set your alerts just over this level to watch for a breakout. Swing
traders should watch for a continuation move following any breakout. Should
Pfizer close above the near-term breakout level, short-term aggressive traders
may look to capture a move toward the previous high.

‘

Let’s take a look at another non-tech play today, Merrill Lynch
(
MER |
Quote |
Chart |
News |
PowerRating).

Merrill Lynch
(
MER |
Quote |
Chart |
News |
PowerRating) broke out from a high-level cup pattern
last Thursday. We saw the first continuation move on Monday. Watch for a
retracement to the near-term uptrending line to provide potential entry
points. 

Until later, 

Dave Baker

Remeber to use
protective stops on every trade.

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