More Constructive Action

October 23, 2002
Dave Landry

On Wednesday, the Nasdaq lapped lower and chopped higher
and then lower in early trading. It found its low early in the afternoon and
mounted an impressive rally. This buying accelerated going into the close.

Once again, continue to notice that the “Bow Tie”
moving averages (10 simple, 20 exponential and 30 exponential)
continue to turn up (and crossover).

The S&P put in a similar performance. The “Bow Tie” moving averages continue to turn up
here too (and crossover).

So what do we do? I’m encouraged by Wednesday’s action. The
early morning sell off seemed to lull the bears into a false sense of security.
So, once again, so far so good. I continue to like the transition action in
many sectors. This includes the banks, insurance, HMOs, internet and software.
Even the biotechs and semis are beginning to shape up. However, let’s not bet
the farm just yet. Continue to take it day by day. And, above all, keep it light
due to the recent volatile nature of the market.

Looking to potential setups, Biogen
(
BGEN |
Quote |
Chart |
News |
PowerRating), in
the aforementioned improving biotechs, looks like it has the potential to
continue its strong rally from lows out of a First Thrust.

No Tickee, No Tradee!

As you’ve heard me say before, waiting for entries can
often keep you out of a bad trade. Notice today that Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating), mentioned
recently, was whacked on Wednesday (a). Fortunately, it did not come close to
triggering (b).