Millipede Market
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.
I’d like to give special thanks to Duke Heberlein for
filling in while I was away. After reading his pieces, I know I shouldn’t stay
away for too long. Otherwise, I’d be out of a job.
I’d also like to thank all of you who attended
TradingMarkets2000. You have no idea how proud I am now that I know who many of
our members are. I am humbled! Never have I seen such a large group of talented
traders.Â
For the first time in years, I actually took a few days off
from the market. Therefore, I suppose a little post-mortem is in order. With the
benefit of 20/20 hindsight, here it goes: On Friday, after gapping lower, we got
the mother-of-all reversal days higher (a). It seemed that those I spoke with Friday
night were incredibly optimistic. This concerned me as it takes a little more
than one day for a meaningful bottom to form (see recent commentary from myself
and Cooper). The lack of follow-through to upside on Monday and Tuesday
(b)
suggested that we were heading back to old lows (seems that Duke caught this in
real time). Today (Wednesday) we got the move below the June lows before yet
another reversal day.
Now, I have to use the right side of the chart (I’ve yet to
find a broker that will let me trade off of the left side of the chart. If you
know one, let me know!). Although a late-day sell off kept the index from
closing well, I’ll score Wednesday’s re-test and reversal as a positive. The longer the market can hold these levels, the better. However,
let’s wait a few days before we start kissing each
other.
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What concerns me is
that a new shoe drops each day: Apple, war, and now JP Morgan, IBM and the CPI. One has to
wonder how many feet that this bear market has. Also, under the hood, things
aren’t as good as Wednesday’s reversal might suggest. Many stocks were decimated
on heavy volume. Tool through the New
60-day Lows On Double Volume List and you’ll see what I mean.Â
So what do we do? I still see no reason to get excited
about the long side here. On the sell side, the market is so oversold that few
shorts are setting up. Therefore, continue to tread lightly until better days.
If we can get a decent bounce, we should see numerous shorts set up.
Looking
to potential setups, McKesson Corp.
(
MCK |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, seems to be finding support around the $30 range. This
suggests its longer-term uptrend may remain intact.
For you breakout players, Astropower
(
APWR |
Quote |
Chart |
News |
PowerRating),
mentioned recently by my comrade Duke, formed a bullish outside day on Wednesday
and looks poised to break higher.
On the short side, Scientific Atlanta
(
SFA |
Quote |
Chart |
News |
PowerRating),
on the Pullbacks
Off Lows List, rallied nicely after gapping lower but remains in a
vulnerable position. Look for additional downside here, especially if
Wednesday’s lows (a) are taken out.
SBA Communications
(
SBAC |
Quote |
Chart |
News |
PowerRating), also on the Pullbacks
Off Lows List, looks poised to challenge its old lows.
Best
of luck with your trading on Thursday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
P.P.S. I’d like to give special thanks
to all of you who were kind enough to introduce yourselves to me in Vegas. It was great
to put faces to the e-mails.