How To Boil A Frog
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 open slightly higher (a) and then sold off in a
choppy manner to close poorly (b).
For those
keeping score, this is the lowest close since December of 1998.
So what do we do? We’re back to
the oversold dilemma. Short this market and we’ll get a bounce. Buy it and
oversold becomes more oversold. With that said, I’d rather sit back and wait for
another shot at a bounce play. After that, go back to shorting.
If you do decide to
short now, those stocks that are off of their recent lows (e.g. BRCD from
Tuesday’s commentary) are likely to be your best bet. Here are
a few.
Powertel
(
PTEL |
Quote |
Chart |
News |
PowerRating), in the weak telecoms
(
$XTC.X |
Quote |
Chart |
News |
PowerRating)
and on the Pullbacks
Off Lows List, looks poised to resume its strong downtrend. Other telecoms like VoiceStream Wireless
(
VSTR |
Quote |
Chart |
News |
PowerRating) and Telebras Holdings
(
TBH |
Quote |
Chart |
News |
PowerRating)
have formed similar bearish patterns.
Pharmaceuticals
(
OSIP |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Lows List, looks poised to resume its strong downtrend out of a
three-bar pullback from lows.
Random Thoughts
I continue to receive emails about my recent
commentary on how the markets have changed.
After postulating some complex theories (with
the help from you, of course), I
began to think, maybe it’s just a good old bear market. You know, the kind
young punks like me have never seen. I heard we had one of these in the ’70s.
Anyone remember?
I’m still amazed at the amount of complacency
out there. Today, I pointed out to one individual that the Nasdaq was selling off. His
reply was, “Oh, it’s just 50-points”. Well, that’s about 2%. And if my
math is correct, if it continues to sell off 2% per day, it’ll be at zero in 50
days. It reminds me of the frog and boiling water.
If you throw a frog into boiling water, he’ll jump right out. However, if you
put him into cool water and slowly heat it, you’ll eventually boil him.
Best
of luck with your trading on Thursday!
P.S. Reminder:
Protective stops on every trade!
“..Barley is quite happy too……..”
Steve
S.
No risk, 30-day, money
back guarantee.