How Thinking Like A Cajun Chef Can Help You Survive Current Markets

January 10, 2003
Dave Landry

On Friday, the Nasdaq lapped lower but quickly found its
low and began to rally sharply. However, it found its high by late morning and
began to sell off. Then, early the afternoon, it began to work its way higher.
Although it was soft going into the close, it still was able to close
well, in the plus column and remains above its 200-day
moving average (a).

The S&P also put in a somewhat similar performance but
ended the day at a scratch.

So what do we do? Based on indicators such as the VIX
and average TRIN, the next round of market timing signals will likely be on the
sell side. However, so far, the market is generally performing well. Therefore,
I still think both sides can be played. However, make no bones about it, it’s
choppy out there. As soon as you think you’ve caught a resumption of trend, as
my neighbor Emeril likes to say, BAM! the market reverses. Therefore, continue
to keep it on the light side.

Looking to potential setups, the telecom sector remains set
up as a high level (i.e., “running”) cup and handle.

Considering the above,
Sprint
(
FON |
Quote |
Chart |
News |
PowerRating), mentioned Thursday night, still looks like it has the
potential to resume it uptrend out of its first pullback since breaking out of a high-level
cup-like formation.

On the short side, even though independent oil and gas (a)
remains fairly strong as a sector, many stocks within the sector are showing
signs of breaking down. Further, oil service has already broken down and looks
poised to resume its rollover from an inverted cup and handle. Considering the
above, Xto
Energy
(
XTO |
Quote |
Chart |
News |
PowerRating) looks like it has the potential to resume its rollover from a
high level inverted cup and handle-like formation.