Holding Pattern?
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.
Trader’s
Galleria has recently added more products. Check it out and pre-order my upcoming book on swing
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On Thursday, the Nasdaq lapped higher (a) and found high
fairly early. After sliding a bit, it then began to rally in a choppy but
steady fashion. This action has it closing on its high (b)and gives us a higher low (c). Not much to write home about when it comes to
calling an uptrend, but you have to start somewhere.
The recent highs, around 3500 (d), become the next logical
target, which also will likely correspond with the 50-day moving average when
(if) it gets there.
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The overall market
is overbought and due for a pullback.
The S&P is
bumping up against overhead resistance. This also corresponds with the 50 and
200-day moving averages.
The good news is that our swing trade setups on the long side continue to work/follow through.
(
IDPH |
Quote |
Chart |
News |
PowerRating),
from Monday, tacked on another 11 15/16 and
(
OSIP |
Quote |
Chart |
News |
PowerRating), from Wednesday, tacked on another
5. Even tech issues such as
(
PSFT |
Quote |
Chart |
News |
PowerRating), from Wednesday, and
(
HNCS |
Quote |
Chart |
News |
PowerRating), from
Tuesday, had decent days. This suggests that things are improving.
So what do we do? It’s times like these when you can’t get too
excited about the setups and press. You have to realize that the market may
have limited upside over the next few days until the overbought condition is
worked off. Also, with the election looming, we could see somewhat of a holding
pattern. Therefore, it’s probably not a bad idea to consider a short or
two. Also, I still think focusing mostly on the defensive issues on the upside
is a good idea.
Looking
to potential setups, Schering Plough
(
SGP |
Quote |
Chart |
News |
PowerRating), a drug stock mentioned recently,
still looks like it has the potential to rally out of a pullback.
PeopleSoft
(
PSFT |
Quote |
Chart |
News |
PowerRating), mentioned Wednesday night, appears to be resuming its
uptrend.
Eclipsys Corp.
(
ECLP |
Quote |
Chart |
News |
PowerRating), on the on the Pullbacks
Off Highs List, is a combination healthcare/software stock-two sectors that
seems to be doing fairly well lately. The stock looks like it has the potential
to rally out of a four-bar pullback.
On the short side, the BroadBand Holders
(
BDH |
Quote |
Chart |
News |
PowerRating),
on the Pullbacks
Off Lows List, appear to be stalling out in the area of their recent gap
down (around 65). This suggests their meltdown remains intact.
On the Proprietary
Implosion List, Cooper Cameron
(
CAM |
Quote |
Chart |
News |
PowerRating), in the vulnerable oil service
sector
(
$OSX.X |
Quote |
Chart |
News |
PowerRating)–see tonight’s option commentary, looks poised to resume
its strong downtrend out of a four-bar pullback from lows.
Best
of luck with your trading on Friday!Â
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!