Nice Follow Thru
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 1.50 and the Bond market is up 1 tick.
Last night, we had six buy signals on the Market Bias Page. As a general rule, whenever 3 or more signals are pointing in the same direction it normally suggests a strong market bias. One word of caution for tomorrow though, most of the signals on the Market Bias Page are from yesterday and we may have already seen the majority of the move. Watch the S&P Globex Futures overnight for clues.
Last night, I mentioned Microsoft [MSFT>MSFT] (see archive for 3/24/99) as a Running Cup and Handle. Today, it gained over 8 1/2 points to hit and close at an all time high. These are the types of moves that are possible when you combine a technical pattern with a strong Market Bias. You may want to print off last night’s chart and keep it for future reference.
After such a strong up day, I tend to focus on stocks that are in pullbacks versus those who have already broken out. The theory being that these stocks may have more upside potential as they are less extended.
On the Pullback List, Wal Mart [WMT>WMT], American Express [AXP>AXP] and Best Buy [BBY>BBY] all closed well reversing yesterday’s sell off. This pivot back into the direction of their uptrends is positive and sets the stage for them to possibly challenge their old highs.
Yesterday, Nextlink Communications [NXLK>NXLK], on the Pullback List, gapped higher on the open but reversed and closed poorly. This failed rally or “head fake†up may have cleared out the weak hands. The fact that it closed well today suggests that it is ready to resume its uptrend, especially if it can take out yesterday’s high (55 3/4).
Boston Scientific [BSX>BSX], also on the Pullback List, failed to participate in today’s rally. Watch this stock tomorrow to see if it plays “catch upâ€.
On the short side, Micron Technology [MU>MU], on the New 60-Day Lows on Double Volume List, continues to break down. When a downtrending stock fails to show any life on a day like today it’s probably telling you something (and it ain’t good!).
Best of luck with your trading on Friday!
Dave Landry
Director of Research
TradingMarkets.com