Listening To The Database
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 Tuesday, the Nasdaq continued its bad behavior: opening
near its high (a) and closing on its low (b).
Tuesday’s action puts the index at new lows for the year.
As you’ve heard me
say before, it pays to listen when our database is “talking.” For
instance, tonight (and for quite some time, for that matter) I see that ourÂ
Proprietary
Momentum List is made up mostly of foods, drugs, and healthcare,
and the Proprietary
Implosion List is littered with former tech darlings. Going through
all of these lists is a great exercise. If your schedule allows, I strongly
urge you to do this every night.
So what do we do? As
implied above, once again the defensive stocks, such as drugs
(
$DRG.X |
Quote |
Chart |
News |
PowerRating) and
consumer non-durables
(
$CMR.X |
Quote |
Chart |
News |
PowerRating), hit new highs while the tech wreck
continues. Therefore, at the risk of boring you to death, stick with defensive issues on the
long side and consider a short or two in tech.
Looking to potential setups, Respironics
(
RESP |
Quote |
Chart |
News |
PowerRating),
mentioned Monday night and on the Pullbacks
Off Highs List, still looks like it has the potential to rally out of a
pullback, especially if it can take out (trade above) Monday’s pivot high (a).
Clorox
(
CLX |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, is in its first pullback since rallying off of major lows
On the short side,
Cache Flow
(
CFLO |
Quote |
Chart |
News |
PowerRating), on the Trading
Where The Action Is List, looks poised to resume its meltdown.
Continuing on the short side, Clear Channel
Communications
(
CCU |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Lows List, has formed an inverted cup-and-handle. Corixa
(
CRXA |
Quote |
Chart |
News |
PowerRating),
on the same list, looks poised to resume its freefall.Â
Best
of luck with your trading on Wednesday!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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.