And The Market Direction Is…..

March 28, 2002
Dave Landry

On Thursday, the Nasdaq open higher and initially continued
higher. However, it quickly found its morning high and began to chop around. It
did manage to return to those highs late in the day but finally, drifted into
the close. It wasn’t as exciting as I tried to make it. Essentially it was thin,
pre-holiday trading.

It still remains below its 50 and 200-day moving averages.

The S&P also chopped. Unlike the Nasdaq, it closed
poorly. It did manage to stay above its 200-day moving average though.

The VIX hit multi-year lows yet again. I’m not going to
make too much out of this today because holiday trading can skew the
index. Continue to watch to see if it gets stretched 10% or more away from its
10-day moving average. If it does, we could be in store for a more meaningful
correction.

So what do we do? I think I’ll wait until next week before
I make any big prognostications. For now, I think the market remains vulnerable
enough to consider a short or two. I’m basing this on the low VIX and the the
fact that the indices aren’t making much progress. No matter what you do, you
might want to keep it light until we get out of this chop.

Â Looking to potential setups, the homebuilders appear
to be forming topping patterns–inverted cup and handles, Head and Shoulders and
Bow Ties. Watch the stocks here for setups.