Bounce Day One
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
Monday, the Nasdaq probed to new lows but reversed and rallied for a solid trend
day higher. This action has it closing on its high (a).
So what do we do? As mentioned Friday, I think we should
wait for the bounce and then look to short this market. Monday’s action
obviously counts as day one of the bounce from lows and sets up a few
shorts. Ideally, I’d like additional continuation to the upside before
attempting to get short again. With that said, I’d keep it light, especially in
front of a Fed meeting.
Looking to potential setups, American Standard
(
ASD |
Quote |
Chart |
News |
PowerRating),
on the Pullbacks
Off Highs List, looks like it has the potential to resume its strong uptrend
out of a deep pullback. Just make sure you use protective stops because you
don’t want to go down the toilet on this one (you have no idea how long I’ve
been waiting for this one to set up so I could use that joke).
On the short side, even though
broker/dealer
(
$XBD.X |
Quote |
Chart |
News |
PowerRating) was up on Monday, it still looks vulnerable longer
term. With that said, Morgan Stanley Dean Witter
(
MWD |
Quote |
Chart |
News |
PowerRating) on the Pullbacks
Off Lows List, looks poised to resume its downtrend.
Even though Ballard Power Systems
(
BLDP |
Quote |
Chart |
News |
PowerRating), mentioned recently, was up on Monday, it still looks like it has
the potential to resume its longer term downtrend.
Random Thoughts
Remember
when stocks went straight up in 1999 and early 2000? And, traders beat their chest for being so
smart and buying stocks? Well, now, we’re beginning to get that same euphoria
from traders but in reverse. The “new paradigm” augments to the upside
of 99/early ’00 have given way to numerous doom and gloom arguments of today. I think
this is a sign of the times and brings us one step closer to the end of the bear
market.
Best
of luck with your trading on Tuesday!
P.S. Reminder:
Protective stops on every trade!
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