Paper Losses
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
Monday, the Nasdaq had a relatively narrow and choppy day–not much to write
home about.
It’s too early
to tell, but, this looks like the beginning of a contraction of volatility
before another expansion to the downside.
There’s still quite a bit of compliancy out there. For
instance, over the weekend, I got in a major fight with my in-laws who argued
that their huge losses in technology stocks were not real but just “paper
losses.” Sorry about ruining dinner guys. If you don’t want my opinion,
keep off the subject of the markets. Stick with “safe” topics like
capital punishment, politics, abortion, and religion.
So what do we do? I don’t think Monday’s rally
has much
meaning. It did help to set up many shorts that were previously very oversold.
Therefore, focusing on the short side seems to be the logical play for Tuesday.
And, at the risk of preaching, tread lightly!
Looking to potential setups, Tellabs
(
TLAB |
Quote |
Chart |
News |
PowerRating), mentioned
recently and on the Proprietary
Implosion List, still looks vulnerable.
VoiceStream Wireless
(
VSTR |
Quote |
Chart |
News |
PowerRating), mentioned recently and on
the Pullbacks
Off Lows List, still looks like it has the potential to resume its strong
downtrend.
JDS Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating), on
the Pullbacks
Off Lows List, looks poised to resume its strong downtrend out of a
pennant.
Remember the 70s?
“I’m a 54 year old wet behind the ears young punk. In
’73 my
broker* advised me to buy Redmond Industries, the RV mfg. I got in around 35, he then convinced me to average down at 15.
I finally threw in the towel at 6. What’s that, an 85% drop? One of my young friends who is holding 500 shares of JDSU
from 120 tells me that it can’t go any lower. I relate the above story to him…….(but
it) doesn’t sink in.”
Eric C.
Best
of luck with your trading on Tuesday!
P.S. Reminder:
Protective stops on every trade!
*I edited out the major brokerage firm. I figured
it wasn’t fair to pick on any one firm when many or all were guilty.
“….this
book provides a solid foundation for anyone trying to learn how to make money….”
Darren
B.
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back guarantee.