Headed Back Above?
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 markets opening. Therefore, overnight events may alter the outcome of these observations.
Special thanks to Duke Heberlein
for filling in while I was away. Â
At the time this is being published, the S&P Globex
futures are trading .50 points lower and the bond market is trading up 1 tick.
Because I’ve been off the screen for a few days, I thought
it would be interesting to look back at how the Nasdaq traded over those days.
Last Wednesday (a) the index formed a bullish outside day after its breakout
from the consolidation. Had I been on the screens here, I admit that I’d
probably would have looked to trade it on the long side. On Thursday (b),
it reversed and close poorly, suggesting the breakout was a false breakout. It
then followed through to the downside on Friday. Today (Monday), it held
was able to hold above last Friday’s low which is also a support level near the
middle of its recent trading range (c), around 3800.
With this false breakout behind us, we could easily get a
swing move back above the consolidation. Confirming this potential move is the
fact that we have three indicators pointing higher on the Market Bias
Page. Also, I’ve noticed quite a few pullbacks that have set up nicely in
tech, namely the bios and semis.
So what do we do? Based on the setups I’m seeing, it
looks like many momentum stocks have the potential to challenge their old highs.
If we get there (maybe later this week?), we’ll have to re-evaluate.Â
Looking to potential setups, Myriad Genetics
(
MYGN |
Quote |
Chart |
News |
PowerRating),on
the Pullbacks
Off Highs List, like many of the bios, sold off earlier on Monday, but
reversed to close well. This may have shaken out the weak hands and could clear
the way for the stock to trade higher. Idec Pharmaceuticals
(
IDPH |
Quote |
Chart |
News |
PowerRating), another
bio and on the same list, began rallying out of a pullback on Monday and looks
poised to challenge its old highs (around 126 1/2).
Micron Technologies
(
MU |
Quote |
Chart |
News |
PowerRating), also on the Pullbacks
Off Highs List, is forming a small pennant in a strong uptrend and looks
poised to break higher.
For you breakout players, MRV Communications
(
MRVC |
Quote |
Chart |
News |
PowerRating),
began rallying out of a big picture cup and handle formation on Monday.
On the short side, Computer Sciences Corp.
(
CSC |
Quote |
Chart |
News |
PowerRating), on
the Pullbacks
From Lows List, looks like it has the potential to resume its meltdown.
Best of luck with your trading on
Tuesday!
P.S. Reminder: Protective stops on every trade!
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