Railroad Tracks
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.
face=”Arial, Helvetica”>Join me, fellow TradingMarkets.com
content providers, and other traders and money managers at
the Trading Markets 2000 conference at the Venetian Hotel
Resort and Casino in Las Vegas on October 13-15, 2000.
face=”Arial, Helvetica”>On Friday, the Nasdaq lapped lower
on what looked like a false “pop-down” opening.
However, after a minor rally, the downtrend resumed. The
market mounted a midmorning rally, but for the most part,
trading was lower and choppy throughout the day. Near the
close, the selling accelerated. This has the index closing
on its low (a) and suggests that traders don’t want to hold
stocks over the weekend.
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face=”Arial, Helvetica”>These railroad-track days (up one
day, down the next) make positioning difficult, at best.
face=”Arial, Helvetica”>My hope is that Friday’s action was
due in part to options expiration. Regardless, it’s
important for Wednesday’s low (b) to hold.
face=”Arial, Helvetica”>So what do we do? I see no reason to
get too bullish until we can stabilize and possibly rally
back to 4,200.
Looking
to potential setups, Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating), on the
From Highs List, appears to be stabilizing after pulling
back from all-time highs. Just wait for it to turn back up
(i.e., to trade above Friday’s high).
Quest
Diagnostics
(
DGX |
Quote |
Chart |
News |
PowerRating), also on the
From Highs List, is a pattern I call a Trend Pivot
Pullback. This is when a stock has a one-day
“false” rally in a pullback (like the Nasdaq
Composite). The stock looks like it has the potential to
resume its uptrend if (and only if) it can take out
Thursday’s high.
Continuing
on the pullback theme, Biovail
(
BVF |
Quote |
Chart |
News |
PowerRating) is a deep pullback
that seems to be finding support around 58.
For
you breakout players, Nortel
(
NT |
Quote |
Chart |
News |
PowerRating), on the
Momentum List, broke to new highs on an expansion of
range out of a high-level consolidation on Friday.
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Best
of luck with your trading on Monday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!