Indices Setting Up As Pullbacks

June 18, 2002
Dave Landry

On Tuesday, the Nasdaq opened lower but quickly reversed.
However, it found its high early in the morning and then chopped its way lower
throughout the rest of the day. This action has it
closing poorly and sets up a pullback from lows.

The S&P also stalled out and is also set up as a
pullback from lows.

So what do we do? As mentioned above, the stalling action
in the indices sets them up as a pullback from lows. I’d prefer to also have
sell signals triggering, but, as Mick once said “You can’t always get
whatcha wanna”. Therefore, for the aggressive, look for shorting
opportunities in the Q’s and Spyders. This pullback action also sets up many
sectors as pullbacks from lows, including the brokers, biotech, drugs and
especially the semis. Therefore, look for shorting opportunities here.Â

Looking to potential setups, Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating),
in the aforementioned weak semis, looks poised to continue its downtrend out of
a pullback from lows.