Market Bias Pointing Higher
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.
Tonight we have 4 indicators pointing higher combined with an oversold McClellan Oscillator on the Market Bias Page. Under normal circumstances, this would be very bullish for the market. However, in light of today’s action, you should wait for some follow through to upside before getting too bullish.
Today, some guy was on TV talking about how stocks are on sale and how we should run and buy them. How can these people give such flippant irresponsible advice? Sure the market is oversold but that doesn’t mean it can’t go lower. Fortunately for us, we know better than to try and catch falling daggers. Don’t be a hero, wait for some signs of a bounce or at least strength in the individual issues!
Recently, I’ve been talking about following up on stocks for several days even if you don’t get an initial move provided they don’t do anything wrong. Ask Jeeves [ASKJ>ASKJ], mentioned over the past few nights on the Proprietary Momentum List, is one such stock. Notice that the stock makes a big picture cup formation and then begins to consolidate. It now looks like it has formed a handle of a cup and handle formation (a) or if you prefer, a pullback (b) after a fast move. As you can see, for now, the pattern remains bullish.
Surprisingly, there are actually several pullbacks that look interesting tonight. Harrah’s Entertainment [HET>HET] is in the strong Gaming Sector [$GAX.X>$GAX.X]. Aerial Communications [AERL>AERL], Airnet Wireless Communications [AIRO>AIRO] and JDS Uniphase [JDSU>JDSU] all closed well and look poised to rally on any market strength.
Onsale [ONSL>ONSL], on the Internet Fab 5 List, formed a bullish outside day today and looks like it has the potential to rally out of a low level cup and handle formation.
For you breakout players, Lam Research [LRCX>LRCX], on the Proprietary Momentum List, rallied to close at a new high today and looks poised to break higher.
On the short side, Halliburton [HAL>HAL], mentioned last night and in the weak Oil Service Sector [$OSX.X>$OSX.X], looks poised to challenge its old lows.
Best of luck with your trading on Monday!
Dave Landry
PS – Reminder: Protective stops on every trade!