Bouncing in Sync
Even when a market is trending downwards, you can
see that it’ll hit pockets of support along the way that yield sharp intraday
reversals. Often these short-term reversals coincide with many stocks all
hitting support levels simultaneously.
You can see this across stocks like Bea Systems
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BEAS |
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PowerRating), Applied Micro
Circuits
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AMCC |
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PowerRating), and Siebel Systems
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SEBL |
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PowerRating) and CacheFlow
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CFLO |
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PowerRating).
All of these hit support levels and bounced.
Let’s take a close look at Juniper Networks
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PowerRating) which I’d definitely
lump into the above group of bouncers.
JNPR bounced off a confluence of its 50-day moving average, the
lows of its seven-week range, and its 50% retracement level. You’ve seen enough
instances of this kind of setup in my daily column to know that what happened
today is typical of this type of setup.
What makes this type of setup a market mover is when it occurs
across many stocks in a key sector. The Nasdaq was down as much as 3.7% in early
trading, but all these stocks I’ve mentioned, plus others, hit key support
levels, bring the market back to close with only a small losses.
The moral of the stock is that you can often gauge market
direction and movement by looking for many setups in individual stocks to unfold
and then trigger simultaneously.
Till Tuesday,