Looking For The Perfect Setup

• February 4, 2002
• Dave Floyd

Despite a tapering off of the “accounting
concerns” late in the week, it appears the issue will just not
go away. Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating) is out this morning
with some other revelations about acquisitions that were never reported to
shareholders. Couple that with a plan to increase debt to buy back shares and
the stage is set for a good trading day in Tyco.

Looking at the market technically, it is yet again faced with some key
levels:

S&Ps: 1119 and 1098

Nasdaq: 1503

Dow: 9864

Traders need to be able to adjust in markets like these. Yes, there are
technical setups, but there are also many setups that are based purely on price
action. Be sure to remain cognizant of this and not get too hung up on looking
for the “perfect” technical setup.

Looking at some position-oriented trades, I will be keeping a close on eye on
the Consumer Finance stocks, Household
International
(
HI |
Quote |
Chart |
News |
PowerRating), Capital One
(
COF |
Quote |
Chart |
News |
PowerRating) and Americredit
(
ACF |
Quote |
Chart |
News |
PowerRating), as
accounting concerns appear to be headline issues again.

Key Technical Numbers:

Thought For The Week:

The following quote is very appropriate if in fact the market takes a hit
this week.

“The way to build
superior long-term returns is through preservation of capital and home runs.
When you have a tremendous conviction on a trade, you have to go for the
jugular. It takes courage to be a pig.”

—Stanley Druckenmiller

As always, feel
free to send me your comments and questions. See you in TradersWire.

Dave

** If anyone has some feedback and information on “Financial Spread
Betting” companies, I would be interested in your thoughts, positive and
negative.