Bahama Mama
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.
face=”Arial, Helvetica”>Join me, fellow TradingMarkets.com
content providers, and other traders and money managers at
the Trading Markets 2000 conference at the Venetian Hotel
Resort and Casino in Las Vegas on October 13-15, 2000.
At the time this
is being published, the Globex S&P futures are trading
up 2.50 points and the bond market is trading down 3 ticks.
face=”Arial, Helvetica”>Another day of not too much
significance in Tech Land. I suppose that if I looked hard
enough, I could make a case that the Nasdaq stalled out at
its 50-day moving average. Other than that, more of the
same: choppy trading.
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face=”Arial, Helvetica”>On Wednesday, I spoke with one of
the best daytraders I know. She said, “I’m tired of
trying to trade this choppy s**t! I’m going to the
Bahamas.”
face=”Arial, Helvetica”>I couldn’t have said it better!
face=”Arial, Helvetica”>So what do we do? If you’re not on
your way to the Bahamas, tread lightly (or not at all!),
especially on the long side.
face=”Arial, Helvetica”>Looking to potential setups, Quest
Diagnostics
(
DGX |
Quote |
Chart |
News |
PowerRating), mentioned recently and on the
From Highs List, has formed a pattern I call a Trend
Pivot Pullback. This is where a stock in a pullback has a
one-day false rally. The theory is that this draws in and
subsequently shakes out the fast money. Just wait for it to
take out (i.e., to trade above) the pivot high (a) to help
avoid being caught in another false rally.
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face=”Arial, Helvetica”>Continuing on the pullback theme,
Donaldson, Lufkin & Jenrette
(
DLJ |
Quote |
Chart |
News |
PowerRating), also on the
From Highs List, closed poorly but looks like it still
has the potential to resume its uptrend. Just remember to
avoid this — and any poor-closing stock for that matter —
if it fails to take out (i.e., to trade above) Wednesday’s
high (a). In other words, “no tickie, no tradie.”
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On
the short side, Symbol Technologies
(
SBL |
Quote |
Chart |
News |
PowerRating), on the
From Lows List, is a pattern I call a Trend Knock-Out
(TKO). This is where a stock in a strong downtrend rallies
to take out (i.e., to trade above) its prior two highs. This
often “knocks out” the weak hands and clears the
way for the stock to trade lower.
Worldcom
(
WCOM |
Quote |
Chart |
News |
PowerRating), in the weak telecom sector
(
$XTC.X |
Quote |
Chart |
News |
PowerRating) and
also on the
From Lows List, is a three-bar pullback that looks
poised to resume its downtrend. Ditto for Level 3
Communications
(
LVLT |
Quote |
Chart |
News |
PowerRating).
Best
of luck with your trading on Thursday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!