Reading the Market with the Market Bias Indicator
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 up 3 points and the Bond market is up 3 ticks.
Strong Upside Bias
Tonight, we have six buy signals on the Market Bias Page. This is the most signals pointing in one direction that I have seen in a long time. As you know, there are no guarantees in trading, but when you see this many signals, it pays to take heed, especially in light of the overnight action
Tonight we updated the Cup and Handles List. Several look interesting to me including Microsoft [MSFT>MSFT] and Tellab [TLAB>TLAB] both of which have completed Running Cup and Handles. As we’ve discussed on previous nights, a Running Cup and Handle is a pattern where the bottom of the cup remains right at or above the 50 day moving average. This combines momentum with the pattern.
Running Cup and Handle Notice that Microsoft “cups†right at the 50 day moving average then runs up and begins to pull back to form the handle. This pattern often leads to substantial moves. Source: Omega Research.
On the Pullback List, several stocks look interesting to me tonight. Lowes [LOW>LOW] and Immunex [IMNX>IMNX] both closed well and Safegaurd Scientific [SFE>SFE] seems to have completed its first pullback after a major breakout.
As you know, the Trading Where The Action Is List contains the most volatile stocks and is only for those who are willing to assume a high degree of risk in order to capture potentially larger gains. With that said, CMG Inc. [CMGI>CMGI] (also on the Internet Fab 5 List) rallied nicely and closed well after yesterday’s sell off. It now looks poised to resume its uptrend.
Best of luck with your trading on Thursday!
Dave Landry
Director of Research
TradingMarkets.com