Pullbacks and Trendlines
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 trading .10 points higher and the bond market is trading up 3 ticks.
When analyzing pullbacks, I often like to draw a trendline from highs and wait for the stock to break above that trendline before attempting an entry. With that said, notice that Bea Systems [BEAS>BEAS] has been in a strong uptrend and has begun to pull back. Also notice that this price action allows for a clean trendline (a) to be drawn from the recent highs. Therefore, a break above this line would suggest a resumption of trend. Otherwise, avoid the stock.
On the Pullback List, Cambridge Technology [CATP>CATP] was relatively unscathed today and looks poised to resume its fast break higher. Gentex [GNTX>GNTX] is consolidating by moving sideways and still looks like it has the potential to resume its breakout. Just wait for this one to prove itself by taking out the prior 2-3 bar highs as it did close poorly today.
For you breakout players, Mips Technology [MIPS>MIPS], on the Proprietary Momentum List, ignored today’s sell off and rallied to a new closing high (a).
On the short side, Minimed [MNMD>MNMD], mentioned last night, still looks poised to challenge its old lows (or eventually trade to 1/8th its current size-see archive if this doesn’t make sense). Allergan [AGN>AGN], on the Proprietary Implosion List, looks poised to resume its strong downtrend.
Best of luck with your trading on Wednesday!
PS – Reminder: Protective stops on every trade!