Reading the Market
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 slightly and the Bond market is up 7 ticks.
Anadarko [APC>APC] on the Proprietary Momentum List and Pullback List, looks interesting to me for several reasons. It has formed a high level triangle and closed well today. This suggests that the breakout will be to the upside. Also, in a down market, it pays to look for stocks in the strongest sectors such as the Oils [$XOI.X>$XOI.X] and Oil Service [$OSX.X>$OSX.X] (see Strongest Sectors List).
After a day like today, you might want to focus on stocks on the Pullback List that closed well (those with “Yâ€s under the “Closed in Top 25% of Range Columnâ€) such as First Data Corp. [FDC>FDC] or stocks such as Fiserv [FISV>FISV] and McDermott [MDR>MDR] which have completed bigger picture cup and handles.
On the Explosion List, Psinet [PSIX>PSIX] has been pulling back after breakout out of a high level cup formation. Watch for a potential resumption of its uptrend.
On the short side, Vodafone [VOD>VOD] and Envoy [ENVY>ENVY], both on the Proprietary Implosion List, are breaking down after wide and loose consolidations.
Final thoughts, days like today reiterate the importance of letting stocks “prove themselves” before entering. By proving themselves, I mean waiting for buy candidates to take out the prior days high or for shorts to take out the prior days low.
Best of luck with your trading on Wednesday!
Dave Landry
Director of Research
TradingMarkets.com