Keep It Light

April 22, 2002
Dave Landry

On Monday, the Nasdaq gapped lower and generally worked its
way lower throughout the day. This action has it closing poorly and suggests
that it will test its February lows.

The S&P also sold off hard. It looks like it will
(at least) test the bottom of its recent range. The 1130 area, which also
corresponds with the 200-day moving average, remains resistance to the upside.

So what do we do? The market is quickly becoming oversold
and due for a bounce. However, as you know, oversold can often become more
oversold. Therefore, I think I’d keep it I’d just keep it light for now.
Tonight’s (Monday) lack of meaningful setups seems to confirm this analysis.

Looking to potential setups, Merck
(
MRK |
Quote |
Chart |
News |
PowerRating), in the weak
drugs (and less face it, what good are weak drugs?), appears to be stalling out in an area of overhead resistance. This action suggests that its downtrend
remains intact.