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 3.40 points higher and the bond market is trading up 4 ticks.
Heads up, after the close, Lucent Technologies [LU>LU] warned that it would not meet earnings expectations. The stock was trading nearly 20 points lower in early after hours Instinet trading. This will likely weigh heavy on tech stocks tomorrow.
Another heads up, the Employment Report is scheduled for release early tomorrow morning. This will likely cause extreme volatility in early trading.
As I look to the sectors tonight, it seems like the Cyclicals are beginning to get a foothold. Chemicals [$CEX.X>$CEX.X], Forrest and Paper [$FPP.X>$FPP.X] and Oil Service [$OSX.X>$OSX.X] are in the #1,#3 and #4 slots respectively of the Strongest Sectors List. Itâ€™s too early to tell if this move will be for real here but they are at least worth watching if for nothing more than a short-term trading opportunity. The Biotechs [$BTK.X>$BTK.X] are the only â€œtechsâ€ that remain in the list. They defied the NASDAQ slide and rallied nearly 2.5% today. Whatâ€™s concerning is that the Internets [$DOT.X>$DOT.X] have lost nearly 10% of their value over the past 3 days (the Internet Holder Shares [HHH>HHH] have lost nearly twice that much over the same period). This â€œfall from graceâ€ (hopefully, just a correction) has moved them from the Strongest to Weakest Sectors List. Theyâ€™ve led this bull market for quite some time. It will be interesting to see if we can continue higher without them going forward.
On the Pullback List, AES Corp [AES>AES], mentioned last night, still looks interesting and Dusa Pharmaceuticals [DUSA>DUSA] appears to be rallying out of a deep pullback. Gene Logic [GLGC>GLGC] closed well and looks poised to break out of a high level triangle.
Nanogen [NGEN>NGEN], mentioned over the past few nights, appears to be rallying out of a pullback formation.
For you breakout players, there are quite a few Cyclicals on the Proprietary Momentum and New 60-day Highs on Double Volume List tonight. Those that look like they have some additional upside potential include Hercules [HPC>HPC], Dupont [DD>DD] and Praxair [PX>PX].
On the short side, several stocks look interesting to me tonight. Siebel Systems [SEBL>SEBL], on the Proprietary Implosion List, appears to be failing at the 50-day exponential moving average. Stamps.com [STMP>STMP], on the Pullbacks From Lows List, looks poised to re-test its old lows as does Interphase [INPH>INPH] on the Trading Where The Action Is List.
Best of luck with your trading on Friday!
PS – Reminder: Protective stops on every trade!