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.
Tonight, Iâ€™d like to follow up on the sectors mentioned from last night. Today, the Internet Stocks [$DOT.X>$DOT.X] came roaring back. As mentioned last night, these stocks have been important for the bull market. Their return doesnâ€™t hurt (as opposed for looking for new leadership). Speaking of new leadership, the Biotechs [$BTK.X>$BTK.X] rallied nicely out of a pullback to hit and close at all time highs. It looks like a possible new leg up here. The Cyclicals [$CYC.X>$CYC.X] remain strong. However, the techs (including the Semis [$SOX.X>$SOX.X]) may offer more opportunity as they are appear to be returning.
On the Pullback List, AES Corp [AES>AES] and Dusa Pharmaceuticals [DUSA>DUSA], both mentioned last night, still look interesting to me. Vignette [VIGN>VIGN] rallied nicely today reversing yesterdayâ€™s sell off and Mederex [MEDX>MEDX], in the strong Biotech Sector [$BTK.X>$BTK.X], appears to be rallying out of a deep pullback-suggesting the return of its uptrend. And finally, Asyst Technologies [ASYT>ASYT] is a three bar pullback that looks poised to resume its strong uptrend.
As you know, the Trading Where The Action Is List contains the most volatile stocks and is only for the most aggressive traders who are willing to assume a higher degree of risk in order to capture larger gains. With that said, Incyte [INCY>INCY] broke to new highs on an expansion of range today. Look for a buying opportunity or better yet, wait for the next pullback.
For you breakout players, Nanogen [NGEN>NGEN], mentioned over the past few nights, appears to be rallying out of a loosely formed pullback formation. Gene Logic [GLGC>GLGC], a Genomic Stock mentioned last night (see archive for chart), broke out of a triangle today to closed at a new high.
One final thought, notice that the market found bottom shortly after the 3 period moving average of the NYSE TRIN peaked out (similar to the 10/18/99 bottom, see archive from Thursday for more details). It doesnâ€™t always work this well but as you can see, it pays to look for these types of relationships when looking for the end of a corrective move.
Best of luck with your trading on Monday!
PS – Reminder: Protective stops on every trade!