Pop Up
On Monday, the Nasdaq gapped higher and managed to close
near its high.
This action is a positive as it puts the Nasdaq above its
recent trading range.
The S&P also had a decent day. It’s now at the top of
its recent range and looks like it has enough momentum to break through.Â
Heads up, Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating)
and Cephalon
(
CEPH |
Quote |
Chart |
News |
PowerRating) both announced better-than-expected earnings after the
close. This will likely push the major indices higher–at least on the open (see
below).
So what do we do? Momentum
still favors the upside. However, as the market becomes more overbought, it
might be a good time to lock in some profits on longs and a good time to keep an
eye out for a short or two–especially if it reverses back into its recent
trading range. Also, on Tuesday, we could get a “pop up” opening on
the above news. Therefore, you might want to wait for things to shake out in
early trading. Said another way, do not get caught up in a euphoric opening.
These are usually a good time to lock in profits (on longs) and are not a
good time to jump in for fear of being left behind.
Looking to potential setups, Immunex
(
IMNX |
Quote |
Chart |
News |
PowerRating) (mentioned
Friday, see archive) triggered as a Trend Pivot (false rally) pullback and
appears to be resuming its strong uptrend.
Smoke ’em After Hours
I’m often asked if I trade before/after market hours. In
general, I never initiate new positions before or after normal market hours.
I do adhere to my “smoke ’em if you got ’em” rule (take a piece on
windfall profits). Take Cephalon
(
CEPH |
Quote |
Chart |
News |
PowerRating) (mentioned last night) for example:
the stock triggered intra-day (a) and has traded as high as 70 (b) in early
after hours trading. This does not mean that the stock won’t continue higher.
However, it is a good time to take some profits while the euphoria is high
though. As Linda
Raschke* used to say: “feed the ducks while they are quacking.”*
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*I believe she was quoting someone else but I don’t know who. I’ve also heard
that if you feed peanut butter to ducks you get peanut butter and quackers.
“It is clearly the best
book on swing trading currently in the public domain.
Stanley O.
No risk,
30-day, money back guarantee.
Â