Baby Blue Arrow
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.
On Wednesday, the Nasdaq opened slightly lower and dipped
down to the 2000 support level. It then found its low in this area and
begin to rally. It gave up most of that rally by early afternoon but then
mounted a solid trend upward into the close.
The fact that the index closed
well, survived 2000 and is back above its 50-day moving average (not shown)
suggests that the test was successful. This keeps the first pullback/cup and
handle intact. If fact, I’m so excited, I had to draw a baby blue arrow up!
So what do we do? This is the best I’ve felt about the long
side in quite some time. My “scratch pad indicator”–the number of
stocks that I scribble down while during my analysis–has more longs than I’ve
seen since this bear began over a year ago. The only thing that would change my
mind would be if we sold off and went back to/below 2000. For now though, it
looks like 2200 is the next target. As far as patterns, continue to look for
those that look a lot like the market itself–first pullbacks, cup and handles
and Bow
Ties.
Looking to potential setups, Cabot Microelectronics
(
CCMP |
Quote |
Chart |
News |
PowerRating)
looks poised to rally out of a Bow Tie/Cup and handle. Keep in mind that it’ll
likely bump up against resistance at 75 or higher–but hey, that’ll be a good
problem to have!
Ebay
(
EBAY |
Quote |
Chart |
News |
PowerRating) is another Bow
Tie/cup and handle that looks poised to challenge its recent highs.
Triquint Semiconductor
(
TQNT |
Quote |
Chart |
News |
PowerRating)
looks poise to rally out of a Bow Tie. Just don’t overstay your welcome here as
there is overhead resistance (not shown) in the 30-35 area.
Americredit
(
ACF |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, probed lower earlier in the day but reversed to close well.
This suggests that its pullback remains intact.
Other
You may have heard a rumor that I’ll be at the
Kaltbaum/Fleckenstein Intermediate Term Traders Seminar. It’s true. I’ll be
attending the Dallas May 19th seminar (the other dates are May 5 for Atlanta and
June 2 for Phoenix). I figure, my setups don’t exist in a vacuum. It probably
won’t hurt to learn about trading in longer time frames.
Best
of luck with your trading on Thursday!Â
P.S. Reminder:
Protective stops on every trade!
“..It is
overall one of the best trading books ….. and I have read a lot of them. You
provide very clear examples and explanations. I have read your book three times
so far and will recommend your chapters on psychology to anyone who is
interested in trading stock no matter their time frame…”
Cesar A.Â
Fellow TFM
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