Do Your Homework

• October 30, 2001
• Dave Floyd

Well, it
appears as though last week’s rally is just a memory as the longer-term
trend re-established itself yesterday. Yesterday’s thorough carnage was
excellent for intraday setups, although not nearly as lucrative as -300 Dow days
of past, but nonetheless a good day. 

Based purely from a technical (both the Nasdaq and S&Ps closed below their
50-day moving averages, the S&Ps also closed below its 20-day moving
average) and fundamental standpoint, it appears as though the market will seek
out lower ground in the coming sessions. Be prepared, intraday moves should be
very conducive to quick “scalps.”

The market is still trading very much
from a technical standpoint.  Knowing your levels was imperative yesterday. 
Look at a 1- and 5-minute chart of the S&P and Nasdaq futures and draw in yesterday’s
KTNs, as you will see, they dictated price movement frequently.

For those of you who are not active
from an intraday perspective, I am finding several stocks
which are excellent short candidates both on a technical and fundamental
basis. The list appears below:

Advent Software
(
ADVS |
Quote |
Chart |
News |
PowerRating): Those of you who have read my column for a while know my viewpoint
on the retail sector. Williams Sonoma
(
WSM |
Quote |
Chart |
News |
PowerRating)
may be an excellent way to take advantage if indeed the consumer does continue
to curtail spending. Technically the stock also looks vulnerable.

If you believe that the disaster that
is plaguing Providian Financial
(
PV |
Quote |
Chart |
News |
PowerRating) is
isolated, think again. A slowing economy will not help the overall business
model of sub-par lenders, write-offs may increase and aggressive accounting will
only carry earnings so far. Capital One Financial
(
COF |
Quote |
Chart |
News |
PowerRating) is part of this category and technically looks weak. 

All in all, there is ample opportunity,
regardless of the time frame on which you are trading. Do your homework and take
advantage of the volatility that is at the doorstep.  Remember
to always use protective stops and don’t let your opinions get in the way of
what the charts are telling you.

Key
Technical Numbers (Futures)

The release of Consumer Confidence at
10:00 a.m. EST should prove to be a nice catalyst for volatility and excellent
trading setups. Keep your typing fingers limber for this number.

As always, feel free to send me your
comments and questions.

Dave