If You’ve Got Big Ones, I’ve Got A Stock That Could Implode On Friday

December 19, 2002
Dave Landry

On Thursday, the Nasdaq opened soft but immediately
reversed and began to rally. However, it found it high quickly and began to sell
off. It then generally chopped its way lower throughout the day. This
action has it closing poorly, closing at multi-week lows and closing below its 50-day moving
average.

The S&P put in a similar performance. It too hit and
closed at multi-week lows and below its 50-day moving average.

So what do we do? Lately I have been discussing the
value of not only looking at sectors but looking at stocks within the
sectors (see recent commentaries). Nothing much has changed except that now,
many sectors like the stocks within them, are breaking down below key levels
(e.g., last week’s lows). This action suggests that they are poised to continue
their rollovers. Therefore, I still think the best opportunities will continue
to be on the short side. On the long side, stick with sectors that ran contra to
the indices such as the independent oils. No mater what you do, continue to keep
it light as this year winds down. Also, tomorrow is quadruple witching.

Looking to potential setups, for those with big ones*,
Forest Labs
(
FRX |
Quote |
Chart |
News |
PowerRating), in the weak drug sectors (and let’s face it, what good
are weak drugs?), looks poised to resume its meltdown out of a Explosion Gap
Pivot-like/pullback-like formation.