Nickels
Each evening we focus
on the most interesting aspects of the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
market’s opening. Therefore, overnight events may alter the
outcome of these observations.
On
Thursday, the Nasdaq lapped higher and rallied for a solid trend day
higher–just the opposite of Wednesday.
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This action is impressive, essentially a
“do over” of the day before.
I’m a little skeptical, because in markets,
it’s normally not that easy–scary one day and all clear the next.Â
However, I can’t argue with what my database scans are telling me. Thursday’s
action has set up numerous stocks on the long side. In fact, if I had a
nickel for every setup, I’d have a bunch of nickels! When the database is
talking like this, it often pays to listen. Therefore, I’d focus on the long
side on Friday but set my protective stops just in case.
face=”Arial, Helvetica”>Looking to potential setups, Merix Corp.
(
MERX |
Quote |
Chart |
News |
PowerRating),
on the Proprietary
Momentum List, is a Double Top Knockout (DT-KO). This is a pattern that I
recently began trading. It is based on my theory that a false double
top draws in eager shorts and knocks out nervous longs. This action often clears
the way for the stock to trade higher.Â
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For
Buys (Short Sells are reversed):
-
The
stock must be in a strong uptrend. For those who use ADX, it should be
greater than 30 and the +DMI should be greater than the -DMI. -
The
stock must make a two-month calendar high. -
The
stock must make another two-month high no sooner than three days later. -
The
stock must make at least a two-bar low.
Looking
to other potential setups, Sun Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating), a two-day old DT-KO,
rallied nicely on Thursday (b) to virtually erase all of Wednesday’s sell-off
(a). This reversal of the reversal may be putting the heat on the shorts.
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Guidant
Corp.
(
GDT |
Quote |
Chart |
News |
PowerRating), mentioned Wednesday night, still looks interesting to me.
Interwoven
(
IWOV |
Quote |
Chart |
News |
PowerRating), Elmer Fudd’s favorite stock, looks poised to rally out of a
three-bar pullback.
Tut
Systems
(
TUTS |
Quote |
Chart |
News |
PowerRating) looks poised to rally out of a high level “micro”
double bottom.
And for
those with $320 lying around,* you could pick up one share of Corning
(
GLW |
Quote |
Chart |
News |
PowerRating),
which looks poised to rally out of a three-bar pullback.Â
On the short side, The Gap
(
GPS |
Quote |
Chart |
News |
PowerRating),
mentioned Wednesday night and in the
vulnerable retail sector
(
$RLX.X |
Quote |
Chart |
News |
PowerRating), still looks poised to make another stair-step lower.Â
Best
of luck with your trading on Friday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
*A $300 stock. Has the whole world
gone crazy?