Mixed Signals….Can Make You Swing
The market action Monday was
mixed as traders waited
in anticipation of
the Federal Reserve Board meeting Tuesday. I am still waiting for the
market to show me some further confirmation that this run is going to
last. Don’t get me wrong—I
am bullish on the markets, however not overly bullish to
the point where
I am willing to put my face in the fire. The reasoning behind my
hesitation….my timing composite. It is giving me mixed signals.
What do I do when I get
mixed timing signals? Well
for one
thing,
I will
look for swing trade opportunities and swing trade utilizing a
trailing stop. I have found that by swing trading stocks with good
fundamentals and technical patterns, the trade can lead to an
intermediate term play. By using a trailing stop technique.
it enables you to ride the stock up for a potential hold on an
intermediate basis
In my screening I came up
with a few stocks to look at tonight.
Compuware (CPWR)
is running up the right side of its 20+ week cup. I would like to see
a pull back in price to set up a low risk entry.
Looking at Black Box Corp. (BBOX),
the stock has formed a nice ascending multi-week symmetrical triangle.
The network infrastructure company recently announced a merger with
privately held Vivid Communications Inc.,
which provides technical design, installation and maintenance
services.
Idec Pharmaceuticals (IDPH)
is pulling away from testing its highs of a six week base.
Xoma Ltd (XOMA)
broke out to a new high Monday after the company announced Friday test
results on Xanelim,
a drug used to treat psoriasis. However the stock closed weak in
sympathy with Biogens’ (BGEN)
skid and its other brethren in the sector.
Icon Plc. (ICLR)
looks poised to move again,
as the stock appears to be consolidating in a multi-day mini flag
pattern.
Finally,
keep
your eye on Neurocrine Biosciences, Inc. (NBIX).
It is creeping up on the right side of a multi week base, which is
also resembling a double bottom. It held up relatively well even after
the bio-techs got hit.
Among the sector funds which
moved higher today were the Internet Infrastructure HOLDRS (IIH)
which gained 4.2%. Followed closely by the Internet HOLDRS (HHH)
which closed up 3.4%.
Also tacking on some gains
in Monday’s trading was the Internet Architecture HOLDR (IAH)
which rose 3.0%.
On the other side of the
spectrum, you guessed it—the
Nasdaq Biotecnology Fund (IBB)
led the downward charge by closing lower 2.7%.
In a close second was the
Biotech HOLDR (BBH)
which shed 2.2%.
The Dow Jones Telecomm
Sector (IYZ)
lost 1.5%.
Remember that all securities
are risky. In any new trade, reduce your risk by limiting position
size and placing open protective stops where you will sell your new
buy or cover your short in case the market turns against you. For an
introduction to combining price stops with position sizing, see
Loren’s lesson, Risky Business.