Next Big Red Wave

  • August 8, 2001
  • Eddie Kwong
Next Big Red Wave

When the market plunges, you want to quickly revise your
watchlist and identify stocks that the potential to be in the next red
wave–if we get follow-through to the downside.

One stock I’m watching is Best Buy
(
BBY |
Quote |
Chart |
News |
PowerRating), a stock that
has been flying in an uptrend since Dec.

<insert chart>

Then stock closed on an large-range outside day right at
this potential support:

  • 38.2% retracement of the swing from the May lows to the
    July highs.
  • 50-day moving average
  • Range-lows

In rising market, you’d look at this more as a Landry-esque
pullback within an uptrend. But, the trend looks tired going upstream against
what we have seen in the past couple of days. I don’t have a prediction about
which way, but a breakdown below this support could be a doozy.

Eddie