Of Bears And Dead Cats
Each evening we focus
on the most interesting aspects for 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
markets opening. Therefore, overnight events may alter the
outcome of these observations.
On
Friday, the Nasdaq opened slightly higher but began to slide. Then, after a dip
below the 1800 level, it gained its footing and rallied for most of the day.
Although it closed off the high, we’ll still score it as a positive.
The fact that
the old lows held suggests we could see a bounce in here.
For the month, the Nasdaq
closed poorly and still looks like 1500 could be its next target.
So what do we do? Longer-term, it still looks like a bear
market. However, based on the dailies, it looks like this dead cat has begun to
bounce. Therefore, if you are nimble, you might be able to play both sides.
Otherwise, wait until next week to see if the picture clears–either the rally
continues and sticks or we begin to roll over again.
Looking to potential setups,
the semis are once again at an interesting juncture. Friday’s weakness has them
back to lows not seen since last December. They’ll either break through to the
downside or bounce in here. If you look at the individual names, it’s a tale of
two markets with some probing new lows while others probing new highs.
Considering the above, make
sure you look at these stocks on a case by case basis. With that said, Advanced
Micro Devices
(
AMD |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, is in its first pullback/flag since breaking out of a
high-level wide-and-loose base. Just wait for follow through to the upside here
as it did close poorly on Friday. Also, don’t overstay your welcome as this one,
like many other semis, has a lot of overhead resistance longer-term.
Morgan Stanley Dean Witter
(
MWD |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks poised to make another leg
lower. This stock may also set up as a low volatility situation if it doesn’t
break soon.
T Rowe Price
(
TROW |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks
vulnerable.
The Biotech Holders
(
BBH |
Quote |
Chart |
News |
PowerRating) and the Pharmaceutical Holders
(
PPH |
Quote |
Chart |
News |
PowerRating) still look vulnerable longer-term. Just wait for follow through to the
downside here as they both have been strong as of late.
Other
Early this morning, I pulled out my tattered, dog eared and
highlighted copy of Market Wizards and re-read the chapter on Tony Saliba.
Now, I think I have to go to the seminar.*
Best
of luck with your trading on Monday!
P.S. Reminder:
Protective stops on every trade!
*Sorry Jay, I promise to go to your next
wedding.
“…...Out
of all the books on trading, I always come back to the same two books ( How to
Make Money in Stocks & Reminiscences Of A Stock Operator) and re-read them
each and every year. I think that I will have to add “Dave Landry on swing
trading” to that list….”
Thorne
R.
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