Split Personality
With
the Nasdaq Composite narrowly escaping another red close yesterday,
the Bulls engineered a “sudden breakout in prosperity†immediately after the
regular session had concluded.When it was clear
that the rumored intra-quarter rate cut by Greenspan and pals was not enough to
do the trick, the Bulls resorted to more drastic measures.
With the Nasdaq
futures exploding up almost 50 points shortly after yesterday’s close, you had a
feeling we would be in for a wild and wooly one today.
And so it was said…And so it was done.
With so many of the
glamours gapping up excessively at the open today (after closing somewhat un-glamourously
yesterday), you had to think fast. I
decided to ride the momentum train today, but proper entries can be very tricky
on days when the market gaps up excessively. Let’s
take a look at one of my faves, Juniper Networks.
After watching
Juniper stumble for seven consecutive days, I was on the lookout for a bounce.
Yesterday’s candlestick gave us a “spinning top” which told
us that the current trading pattern (down!!) might be running out of gas.
By looking back in Juniper’s daily chart, I identified three potential
areas of support: A, B and C (as
labeled on the chart). Areas A and
B are gap areas and C is the low from a green candlestick back in late May.
By examining the chart, we see that Juniper found support yesterday at
gap area “B,” however, the evidence was not compelling enough for us
to have initiated long positions yesterday. Follow-through of price action was required and exactly what we got
today.
After
gapping up excessively, Juniper retraced slightly then proceeded to not only
exceed yesterday’s high, but fully close and exceed the bearish gap down from
two days ago. This is what you call
“follow-through.” As
such, JNPR triggered a long position entry above yesterday’s high.
The long-term support level from 08/03 still concerns me, however.
Juniper will need to continue its ascent to confirm today’s rally
through resistance.
Long
Watch:
(
VRTS |
Quote |
Chart |
News |
PowerRating),
(
VRSN |
Quote |
Chart |
News |
PowerRating),
(
CHKP |
Quote |
Chart |
News |
PowerRating),
(
BEAS |
Quote |
Chart |
News |
PowerRating),
(
SEBL |
Quote |
Chart |
News |
PowerRating),
(
SUNW |
Quote |
Chart |
News |
PowerRating),
(
JNPR |
Quote |
Chart |
News |
PowerRating),
(
BRCD |
Quote |
Chart |
News |
PowerRating).
Short
Watch: Defensive issues and drugs look vulnerable.
The
Nasdaq still has a lot of healing to do before we can truly get excited.
This was a nice
start to build upon.
Have
a great holiday weekend.
Charts
were created with Realtick. Realtick graphics are used with permission of
Townsend Analytics, Ltd.
All rights
reserved.