Mixed Bag

October 24, 2001
Dave Landry

On Wednesday, the Nasdaq chopped its way higher. It managed
to close well and above its 50-day moving average.

The S&P chopped around in a narrow range. This action
(if you want to call it that) has it below the 1100 resistance level and below
its 50-day moving average.

So what do we do?Â It’s a
bit of a mixed bag. The Nasdaq looks like it has the potential to break out but
the S&P appears to be stuck in the doldrums. Also, as I look to the market
timing systems I follow, none are triggering buys or sells. Therefore, in such a
mixed environment I suppose both sides can (and should?) be played. However,
there’s no need to get too excited either way. It’s still too choppy out there.

Looking to potential setups, Greenpoint Financial
(
GPT |
Quote |
Chart |
News |
PowerRating),
mentioned recently and in the weak bank sector
(
$BKX.X |
Quote |
Chart |
News |
PowerRating), looks poised to resume its downtrend
out of an inverted cup and handle. Also, (as mentioned last night) pull up the weekly when you get a
chance. It looks like its forming an inverted cup and handle there too.

I caught the end of Gary
Kaltbaum’s presentation at Trading Markets 2001. He spoke, very passionately,
about how powerful gaps can be. He cited a study from the Wall Street Journal
which was backed up by his research. I was very impressed and can tell you that
is one audio tape I will buy. Since TM2001, I have been paying more and more
attention to gaps. With that said, Kimberly Clark
(
KMB |
Quote |
Chart |
News |
PowerRating) is in its first
pullback since a serious gap lower.

Instant Grits*, Microwave
Ovens, Fast Food…and Stocks?

In this fast paced world, we’ve
all grown accustomed to instant gratification.Â It seems that many in
trading are the same way. However, markets are seldom accommodating to our needs
and desirers. This is why I tryÂ to stay focused on the swing trade
time frame–normally 2 to 7 days. And, I try to give positions at least 2 days
to see if they will work out. Take Micro Semi
(
MSCC |
Quote |
Chart |
News |
PowerRating), mentioned Monday, for
example. On Tuesday, the stock triggered an entry but then reversed (a). Then,
today (Wednesday) the stock rallies over 2 1/2 points (b).Â If you’re a
nimble day trader, there’s nothing wrong with bailing out at the first signs of
a reversal. However, if you are looking to capture a larger swing, you might
just have to wait a day or so.