Giving An Apple To A Dead Cat
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
market’s opening. Therefore, overnight events may alter the
outcome of these observations.
I’m pleased to announce that we recently launched the Trader’s
Galleria. Check it out, there you’ll find books, software, trading courses,
computers and just about everything else a trader needs to be successful. You
can even pre-order my upcoming book on swing
trading at a 20% discount.
Heads up! After the
close, Apple Computer
(
AAPL |
Quote |
Chart |
News |
PowerRating) announced that they would have an earnings
shortfall. The stock is trading about twenty bucks lower in early after-hours
trading. This will likely weigh heavy on tech on Friday.
Finally,
a decent day in the Nasdaq. On Thursday, the Nasdaq lapped lower (a) but rallied
nicely to close well (b). This action makes the 3600 support level (c)
even more important.
width=”470″ height=”320″>
The S&P rallied
nicely back above its 200-day moving average. This action leaves a double bottom
around 1420. This too creates an important support level.
width=”470″ height=”320″>
Thursday’s action is impressive, but let’s not
start kissing each other just yet. So far, this really can’t be classified as
much more than a dead cat bounce.  Â
Friday’s action will be important.
Another day up in front of the weekend would be just what the doctor ordered for
this sick market. However, the bad Apple today might not keep the doctor
away.
So what do we do? Watch the open on Friday.
If, and only if, we can recover from the inevitable down opening, there
may be some buying opportunities for the nimble. Other than that, I’d
remain defensive and look to play both sides.
Looking
to potential setups, players may go back to the drugs
(
$DRG.X |
Quote |
Chart |
News |
PowerRating) on any
weakness Friday. With that said, Allergan
(
AGN |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, looks poised to rally out of a three-bar pullback. And, Alexion
Pharmaceuticals
(
ALXN |
Quote |
Chart |
News |
PowerRating) appears to have found support in the area of its
last breakout.
width=”470″ height=”320″>
Network Appliances
(
NTAP |
Quote |
Chart |
News |
PowerRating), also on the Pullbacks
Off Highs List, formed a bullish outside day in a pullback on Thursday.
On the short side, Micron Technology
(
MU |
Quote |
Chart |
News |
PowerRating),
mentioned recently and on the Pullbacks
Off Lows List, looks poised to make another stair-step lower. SCI
Systems
(
SCI |
Quote |
Chart |
News |
PowerRating), on the same list, looks poised to resume its meltdown.
width=”470″ height=”320″>
Best
of luck with your trading on Friday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!