Deja Vu All Over Again?

October 30, 2002
Dave Landry

On Wednesday, the Nasdaq opened firmer and after a brief
dip, rallied nicely for most of the morning. Then, after trading sideways to
lower for most of the day, it resumed its rally going into the close. This action
has it closing well.

The S&P put it a similar performance but under-performed
the Nasdaq.

So what do we do? Wednesday’s action suggests that the
rally from lows remains intact and that the indices have the ability to
challenge their recent highs. Further, I’m encouraged by the positive sector
action. Many tech sectors, including computer hardware, software and the semis, remain
constructive. And, believe it or not, the strongest is Internet. Whoa, Yogi,
could it be deja vu all over again? Probably not, but it’s a start. Therefore,
continue to assume the rally from lows remains intact. The only caveat is that
this market has failed to show (so far) that it has the potential to make
another leg off of its lows. Said alternatively, it’s been trading mostly choppy
and sideways lately. Therefore, continue to keep it light until we see
additional follow through.

Looking to potential setups, Avocent
(
AVCT |
Quote |
Chart |
News |
PowerRating), in the
strong computer hardware–computer peripherals sector (a). Looks like it has the
potential to rally out of a Trend Knock Out (TKO)/First Thrust.

Smoke ‘Em If You Got ‘Em

Inter Tel
(
INTL |
Quote |
Chart |
News |
PowerRating), mentioned recently, triggered and
rallied nicely on Wednesday (a) out of a Bow Tie. When blessed with such a nice, quick profit, make
sure you lock in a piece and move your protective trailing stop on the remainder
to breakeven (at least).