Bear Rally Stalls
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 gapped open (a) but found its high early on. Then after
some chopping around, it worked its way lower. It did manage a decent mid-day
bounce but it gave up most of these gains later in the afternoon. Finally, there was
slight bounce going into the close but this wasn’t enough to get the index above its
open.
Wednesday’s
action has the Nasdaq stopping short of the 2000 resistance level.
I’m not saying that a 2.4% gain is not a good thing, it just looks like we’re
already stalling out in this latest bear market rally.
whether or not this is the bottom. I believe that the
underlying trend is in place until proven otherwise. The fact that the open
didn’t “stick” on the Nasdaq combined with down days on the S&P
and Dow doesn’t add any evidence that we’re through with this downtrend. It still looks like a bear market rally to me.
So what do we do? It sure
looked like we’d go a lot farther before stalling out. This suggests that a
focus back to the short side may be in order. Just keep in mind that Thursday
will likely be thin pre-holiday trading. So if you don’t have to trade, I
suggest you get an early start on Friday’s market holiday.
Looking to potential setups, Time Warner Telecom
(
TWTC |
Quote |
Chart |
News |
PowerRating),
on the Pullbacks
Off Lows List, reversed after a strong rally leaving a “tail.” This suggests that it longer-term downtrend remains intact.
Telebras Holding Co.
(
TBH |
Quote |
Chart |
News |
PowerRating), mentioned recently, appears
to be stalling out in its rally from lows.
Cooper Cameron
(
CAM |
Quote |
Chart |
News |
PowerRating) appears to be mirroring the action
in the vulnerable oil service sector
(
$OSX.X |
Quote |
Chart |
News |
PowerRating). Baker Hughes
(
BHI |
Quote |
Chart |
News |
PowerRating), in
the same sector and mentioned recently, still looks
vulnerable.
Random Thoughts
I heard on CNBC today that they will have a bottom of the
market special. Is it that easy? Do they now ring a bell when the market
bottoms? Fantastic!
Best
of luck with your trading on Thursday!
P.S. Reminder:
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