Perspective

October 25, 2002
Dave Landry

On Friday, the Nasdaq opened flat but quickly began to
rally. Then, after an early morning pullback, it continued to work its way higher
throughout the day. This action has it closing well and makes back all of
Thursday’s losses.

The Bow Tie moving averages (10-day simple, 20-day
exponential and 30-day exponential) continue make the transition from downtrend
proper order to uptrend proper order.

The S&P also closed nicely higher. This action keeps it
above its 50-day moving average and near the top of its recent trading range.

The shorter-term moving averages are also positive
here.

Based on conversations with TM members today, I think a
little perspective is in order. Below are the weekly charts so far this year (it was too painful to go any further back).

The Nasdaq.

The S&P.

And, the Dow.

So what do we do? As you can see, the longer-term trend
continues to remain down. Shorter-term, things are generally improving.
However, the “railroad” track trading (up sharply one day, down
sharply the next) can be frustrating. You get long, you get whacked with a sell
off. You get short, you get whacked with a rally. It’s enough to drive you crazy
(a short drive for some of us). Therefore, look to nibble on the long
side but keep the above charts handy for perspective. And, once again, continue to
keep it light.

Looking to potential setups, biotech turned back up. The
holders
(
BBH |
Quote |
Chart |
News |
PowerRating) look constructive as they are set up as a cup and
handle.

Considering the above, Biogen
(
BGEN |
Quote |
Chart |
News |
PowerRating), mentioned
recently, may be worth another look since it, too, turned back up on Friday.