Insult To Injury
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
market’s opening. Therefore, overnight events may alter the
outcome of these observations.
On Wednesday, the Nasdaq lapped slightly higher on the open
and after chopping around a bit, probed to new 52-week low (a). The last
hour-and-a-half rally (which smelled like short covering) was able to lift the
index off its lows but it wasn’t enough get it in the green or above the open
(b).
It seems that
everyone is looking for a reason to get excited and pick a bottom in here. In
fact, just as some were pointing to Wednesday’s late-day rally as a
positive, Gateway announced after the close that they would have an earnings
shortfall. This adds insult to injury to this market. Gateway is down over 11
points in early after-hours trading. Members of its posse, such as Intel, Dell,
and Apple are also taking a hit. Furthermore, other techs are being taken out
and shot on this and other news, such as analyst downgrades (better late than
never I guess!). All of this will not bode well for Thursday’s open.
So what do we
do? In a bull market, bad news is ignored. However, in a bear market, bad
news is bad. So it seems that once again the market will get whacked. Stay
defensive and consider a short or two (sound familiar?). Also, be extremely
careful on Thursday’s open, which will likely be sharply to the downside.
Looking to potential setups, Respironics
(
RESP |
Quote |
Chart |
News |
PowerRating),
mentioned over the last few nights and on the Pullbacks
Off Highs List, hasn’t gone anywhere, but so far, hasn’t done anything
“wrong” either.
Laboratory Corp.
(
LH |
Quote |
Chart |
News |
PowerRating)
appears to have stabilized after recently pulling back.
Clorox
(
CLX |
Quote |
Chart |
News |
PowerRating),
mentioned Tuesday night and on the Pullbacks
Off Highs List, still looks like it has the potential to rally out of a
pullback.
On the short side,
Cache Flow
(
CFLO |
Quote |
Chart |
News |
PowerRating), mentioned Tuesday night and on the Trading
Where The Action Is List, still looks poised to resume its meltdown.
Best
of luck with your trading on Thursday!Â
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
P.P.S. I continue to refuse to plug my upcoming book
on swing
trading at a 20% discount. It’s just not me!
Â
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.