Trading Where the Action Is
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.
The Trading Where The Action Is List contains the most volatile stocks and are only for those traders who are willing to assume a high degree of risk in order to capture larger gains. With that said, two look interesting to me tonight. National Discount Brokerage [NDB>NDB] appears to be attempting to break out of a lengthy base. Globix Corp [GBIX>GBIX] has recently cupped above the 50 day moving average and gapped to new highs. This, combined with the fact that it closed well today after pulling back, suggests that the stock is now poised to resume its uptrend.
GBIX . Notice that GBIX cups above the 50 day moving average and gaps to new highs. It then pulls back (A). The stock now appears poised to resume its uptrend. Source: Omega Research.
For you breakout players, Nextel Communications [NXTL>NXTL], which is on our Proprietary Momentum List, broke out decisively today from a high level cup and handle formation.
When a strongly trending stock sells off and makes a new two (or more) day low, it often knocks out the weak hands and clears the way for the stock to move higher. This is what I refer to as a “Trend Knock Out†(TKO). On the Pullback List, both American Express [AXP>AXP] and Merrill [MER>MER] are consolidating after last Wednesday’s TKO day. Other stocks that look interesting to me on the list include Circuit City [CC>CC] and Visx Corp. [VISX>VISX] which both closed well after pulling back from all time highs and Guidant Corp. [GDT>GDT] which closed well today reversing yesterday’s poor close.
Best of luck with your trading on Monday!
Dave Landry
Director of Research
TradingMarkets.com