It’s Obvious But Not Easy

February 26, 2003
Dave Landry

On Tuesday, the Nasdaq opened weaker and after initially
trading slightly higher, began to sell off. Then, after chopping sideways
throughout mid-day, it resumed its sell off. This action has it
closing poorly.

Last week’s high/50-day moving average could provide
resistance here. On the downside, the February lows could be a possible target.

The S&P put in a similar performance but wasn’t hit
quite as hard as the Nasdaq.

Once again, the 50-day moving average (which also corresponds with the
bottom of a topping formation and trading range) could provide resistance
here. On the downside, the February lows could be a possible target here too.

So what do we do?Â Wednesday’s performance (or lack
thereof) seems to be typical of this bear market event-driven environment:
After a day or so of optimism, the sellers return. Although the whipsaw can be
tough, continue to believe in what you see longer-term: most sectors (and the
indices themselves) remain in downtrends.Â Therefore, continue to focus on
the short side.Â

Looking to potential setups, since many sectors remain
oversold, focus on those sectors such as utilities that may have further to fall
on their way to new lows (i.e., those in deeper pullbacks).

Considering the above, Nstar
(
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the potential to continue its downtrend out of a pullback from lows.