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 2.00 points higher and the bond market is trading up 1 tick.
Last night when I suggested that the Biotechs [$BTK.X>$BTK.X] looked like they were in another leg up, I didnâ€™t think they would go another 10% in one day(a). I have to admit, these things are getting frothy fast-especially now that the general media is pounding the table on them. I noticed today, that many individual issues ran up initially but subsequently â€œtailed offâ€ (sold off after a run up, leaving what looks like a â€œtailâ€ on the chart). It may be time to take profits/tighten stops on existing positions and wait for the next pullback before attempting new entries.
After today, many stocks seem overbought, even those on tonightâ€™s Pullback List. With that said, there are few that look like they still might have some potential. Nortel [NT>NT] seems to be recovering nicely after a violent shakeout move below the 50 day exponential moving average (ema). Home Depot [HD>HD] looks like it has the potential to rally out of a deep pullback. And, Spyglass [SPYG>SPYG] looks poised to break out of a high level triangle.
Bluestone Software [BLSW>BLSW], on the Above 50-DEMA-DV, seems to have bounced off of the 50-day ema and might have another rally left in it. Just use caution here as this is one of the crazy ones.
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.
MMC Networks [MMCN>MMCN] is rallying out of a low level 2-bar pullback
On the short side, Pharmacia and Upjohn [PNU>PNU], on the Pullbacks Off Lows List, appears to have stalled out after attempting a rally from lows.
Best of luck with your trading on Tuesday!
PS – Reminder: Protective stops on every trade!