My Weekend Research Produced These Names
The S&P 500 and Nasdaq both
ended their recent rally attempts by undercutting the lows they set
on 1/31/03. Technically, the Dow rally
still remains intact, but with volume coming in heavier on the NYSE and Nasdaq
today; it doesn’t look too good right now.
 
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For the most part, my weekend research has produced a few
names setting up. Unfortunately,
until the market produces solid evidence that it is under accumulation, it is
better to avoid new stock purchases and reduce current holdings.Â
Ebay
(
EBAY |
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Chart |
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PowerRating) has been setting up nicely since its previous
attempted breakout on 1/6/03, but the market may take its toll.
Affiliated Computer
(
ACS |
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PowerRating) comes from the solid Computer
sector, but shows what can happen to a set-up when facing a bad market.Â
Possis Medical
(
POSS |
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Chart |
News |
PowerRating) has been defying the market and
pushing higher. This situation
carries heavier risk and offers mixed volume clues.
Take note of the breakout back on 1/8/03 and the
distribution within the
base on 1/9/03. The stock was able
to advance today, but not by much with volume coming in extremely heavy.
 
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Nextel
(
NXTL |
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PowerRating) has been setting up in a lower level base,
but has been unable to push through its 50-day moving average.Â
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Whether the market is bad or good, it is important to
keep an eye on potential setups as they form. It takes a lot of the scurrying around out of the equation once the
next rally unfolds. There is no
real telling exactly how long this decline may last but there are a few things
we can keep track of in order to get a feel for it.
The Put/Call ratio seems to predicting a short-term
bottom is approaching as it has been pushing closer to a close above 1.0. Today’s reading after the bell came in at .99.
The Volatility Index
(
$VIX.X |
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PowerRating) has a ways to go. Most major bottoms have occurred when it reads close to 60. We are standing at 36.70 and it would be nice to see it push above 40
and start rising a little faster.
I keep a close eye on New Highs
vs. New Lows. Right now we are seeing new lows surpass new highs on a daily basis. When this number starts to get extreme or flip to new highs dominating
new lows, we should start to see a new rally.
Finally, keep your ears open to massive bearishness. We all know what this feels like more than what it sounds like.
I have started seeing a consistent exodus from stocks by the public and
into bonds and money market. The
strange thing has been that the market has headed lower and they’ve been
right. Whether on the sidelines
or in the market, the public
is not usually right for very long about the direction of the market.
Continue to watch the market on a daily basis and it
always helps to keep track of a few “secondary indicators’“ to help gauge
the duration of the decline. Inevitably,
will prove its might and the stock market will again offer solid
opportunities.
As always, I appreciate any feedback or questions you
have for me.
Until Thursday,
Timt@tradingmarkets.com