Damned If You Do

June 18, 2001
Dave Landry

On Monday, the Nasdaq opened flat, and after a
brief blip up, turned south. It then bounced again early on, but
resumed its downtrend.

This action has it closing poorly, and below the
psychologically important 2000 level.Â

I guess the $64,000 question becomes: where do we
go from here?Â It doesn’t look like we have much support beyond
the present levels. Therefore, if we don’t stabilize in here, the
April lows could be a possibility.

The S&P did
better than the Nasdaq on a relative basis,
but
is also hovering around minor support. A break below 1200 could
suggest a trip to the April lows here too.

As you know, I like to look at charts–lots of
charts. I believe that if you want to be good musician, then you
should practice. If you want to be a good technician, then you should
look at charts. Tonight, as I tooled through a few hundred charts, I
didn’t like what I saw. Many stocks are once again in bona fide
downtrends, and those that are in pullbacks from highs appear to be at
the “do or die” point.

Once again, we have a plethora of buy signals
(some are from Friday) on the Market
Bias Page. However, not to take away from these signals (some of
which I helped R&D), but I’d rather see some sort of structure in
the market (and within individual stocks themselves) which tells me
the market is headed in the direction of the signals.

So what do we do? This is another one of those
damned if you do and damned if you don’t oversold situations. If you
try to get short now, the market will bounce. If you try to buy, this
oversold market will become more oversold.

Looking to potential setups, there’s not too much
to look at tonight.Â

Millennium
Pharmaceuticals (MLNM)
looks poised to break down out of a Bow Tie/Inverted cup and handle.