Avoid Air Pockets

• December 10, 2001
• Dave Floyd

Good morning. My
column will be a bit brief today due to a late weekend (no late-night
parties, just time with the family in LA). However, I have provided
you with the important stuff, KTNs and a few longer-term picks.

Friday’s action was once again a bit muted. The
range for the S&P and Nasdaq futures was narrow, making setups off of one-minute bars difficult again, with the exception of the first half-hour.
Continuing with our recent game plan, we quickly resorted back to setups off of
five-minute bars and were able to put together a nice day. The market continues to
force traders to bring out their best stuff in order to pull money out
consistently.

The week ahead will be interesting, with some key
economic reports due out as well as the much anticipated FOMC meeting on
Tuesday. If in fact the market trades in a narrow range again tomorrow, be very
careful trading in the afternoon, since liquidity may dry up more than usual, as
many large players will be on the sidelines ahead of Tuesday’s meeting. It is
more important than ever to avoid trading when the chance of hitting an
“air pocket” is there. This market makes it next to impossible to dig
yourself out of blunders. Remember, always put the odds in your favor.

A couple of stocks to consider from the short
side. Both were down big on Friday on large volume — will the pressure
continue?

Coldwater Creek
(
CWTR |
Quote |
Chart |
News |
PowerRating)

Copper Industries
(
CBE |
Quote |
Chart |
News |
PowerRating)

(On the two charts above, the red
line is the 20-day EMA, the blue
is the 50-day EMA, and the
green is the 200-day EMA.)

Those of you who read my column on Friday may
have been fortunate enough to keep an eye on Alliant Tech Systems
(
ATK |
Quote |
Chart |
News |
PowerRating) intraday. You will recall that on Wednesday
I pointed out the bearish nature of the daily chart and showed potential
support. It hit that support level, 74.55, on Thursday and offered a nice
intraday setup on a five-minute bar. It was deja vu again on Friday as the
pattern repeated itself. Three times is a charm, so keep your eyes peeled today.

Key Technical Numbers:

As always, feel free to send me your comments and
questions. See you in TradersWire.

Dave