Home Out Of The Range
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.
On Wednesday, the Nasdaq opened only slightly lower in
spite of pre-market limit down Nasdaq 100 futures. Then, it was off to the races
for a solid trend day higher. This action forms a bullish outside day up.
The fact that Monday’s low held, combined with a strong
close/outside day suggests we will break out or at least challenge the top of
the recent range that we have been stuck in.
The S&P also put in an
impressive performance;
it
cleared the top of its recent range decisively.
So what do we do? The fact that the S&P broke out of
its range, combined with the Nasdaq pushing the top of the range, is keeping me
on the long side. Just make sure to take partial profits, trail your stops, and
honor your protective stops along the way just in case it stalls out. One last
point–it could get a little dicey in here over the next two days with option
expiration.
Looking to potential setups, Lexmark (LXK),
mentioned recently and on the Pullbacks
Off Highs List, still looks like it has the potential to resume its strong
uptrend.
Expedia (EXPE),
mentioned recently, gapped lower but reversed to close well. This action sets up
a bullish outside day in a pullback (a) and suggests that the stock is resuming
its strong uptrend.
Internet Security Systems (ISSX),
mentioned Tuesday night, appears to be resuming its uptrend out of a pullback.
As I mentioned Tuesday, don’t overstay your welcome here, as there is overhead
resistance above 60.
Sonus Networks (SONS),
on the Trading
Where The Action Is List, looks poised to rally out of a loosely formed
low-level cup and handle.
Other
With nice follow through in many of the stocks mentioned
recently, we should have some decent examples of setting initial protective
stops, locking in partial profits and trailing stops soon. I’ll walk you through
these setups once they play out. In the meantime, you might want to look at the
recent archives (on the right side of this page) to see what’s worked and what
hasn’t.
Best of luck with your trading
on Thursday!
P.S. Reminder: Protective stops on every trade!
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