Impressive, But Still A Bear

  • March 27, 2001
  • Dave Landry

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
Tuesday, the Nasdaq opened flat, and after a brief dip lower, mounted a solid
rally. It found its high by early afternoon and then chopped around for the rest
of the day. It did manage to close well, though.

This action puts
the Nasdaq right at recent highs and around the middle of a recent
consolidation.

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The S&P also mounted an
impressive rally.

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The market is becoming overbought in price and in
indicators as evidenced by low three-day average NYSE TRIN readings and a sharp drop in the
Vix.

So what do we do? Tuesday’s action, while
impressive, doesn’t sway me from believing that we are still in a bear market
and that the trend remains down. Therefore, continue to focus on the short side
but wait for follow through (entries) and don’t fight tape intra-day.

Looking to potential setups, Solectron
(
SLR |
Quote |
Chart |
News |
PowerRating),
mentioned Monday night, appears to be resuming its strong downtrend out of a
pullback from lows.

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Although the Biotech Holders
(
BBH |
Quote |
Chart |
News |
PowerRating) were up nicely on
Tuesday, they still look vulnerable longer-term. Just make sure to wait for
entries here.

The Pharmaceutical Holders
(
PPH |
Quote |
Chart |
News |
PowerRating) have formed a similar
pattern.

Dupont Photomasks
(
DPMI |
Quote |
Chart |
News |
PowerRating) appears to have stalled out
in its rally from lows and looks poised to challenge its old lows.

Best
of luck with your trading on Wednesday!

Dave Landry

P.S. Reminder:
Protective stops on every trade!

“…Very straightforward….. Nicely done….. My favorite chapter is “More Thoughts”……”

Dirk V.

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