Here’s Wednesday’s Names…
Like the
wines we like to drink, the market was showing some
legs early on, until anthrax news came out mid-morning. The first piece of news
was that the D.C postal workers died from complications
of anthrax and the second, albeit a potential rumor, was that two crop dusters
in Mississippi were spraying people with a white powdery substance. From this we
can see that we are still in an event–driven
market.
The Nasdaq Composite closed off
fractionally, however on increasing volume, thus setting up another distribution
day. Warning lights should be flashing now as this is our third distribution day
in less than 2 weeks, thus confirming that our defensive stance is a prudent
one.
Plenty of stocks also exhibited some
distribution in the session such as Krispy Kreme Doughnuts (KKD).
With that said we will continue
to monitor our watch list to ensure that the stocks on the lists do not violate
the 50–day average. It is important that we see some improvement in breadth
before we jump in full steam ahead into the markets.
Stocks Breaking
out on High Volume with a Relative Strength of 80 or Better:
| Company Name |
Symbol | Relative Strength |
Price | Average Volume |
Today’s Volume |
| NONE |
Stocks Building
A Base With A Minimum Relative Strength of 80.
| Company Name |
Symbol | Relative Strength |
Price | Average Volume |
Today’s Volume |
| Krispy Kreme Doughnuts |
(KKD) | 93 | 36.70 | 901,800 | 1,262,200 |
| King Pharmaceuticals |
(KG) | 84 | 42.00 | 1,398,600 | 2,116,500 |
| Concord EFT |
(CEFT) | 86 | 28.42 | 5,791,000 | 3,702,800 |
Stocks forming a
Handle
| Company Name |
Symbol | Relative Strength |
Price | Average Volume |
Today’s Volume |
| Pharmaceutical Resources |
(PRX) | 99 | 36.90 | 578,300 | 677,100 |
| Taro Pharmaceutical |
(TARO) | 98 | 40.33 | 712,100 | 713,900 |
| Independence Community Bank |
(ICBC) | 88 | 22.91 | 588,000 | 783,300 |
Sectors leading the session were the
Airline Index ($XAL.X),
which gained 4.3%
The Transportation Index ($TRX.X)
tacked on 3.1%
And the Oil Services Index ($OSX.X)
climbed 1.3%.
Losing ground due to earnings woes was
the Pharmaceutical Index ($DRG.X)
which slid 1.6%.
The Healthcare Index ($HCX.X)
fell 1.4%
And the Biotechnology Index ($BTK.X)
closed fractionally lower by 0.9%.
Remember that all securities are
risky. In any trade, you should always reduce your risk by adjusting position
size and placing open protective stops where you will sell your long or
cover your short in case the market turns against you. For an introduction to
combining price stops with position sizing, see our lesson, Risky
Business.