Reacting To News
Since last
Thursday, we have seen the market rally on lighter trade. This does
not bode well for a continued advance, but neither does it preclude one from
occurring.
Tomorrow is the earliest I would
expect to see a follow-through day on Friday’s rally. After watching
yesterday’s strong rally, it is probably a good idea to note the two features
of a follow-through day: We’re looking for a 2% gain in one or more of the
three major indices on greater volume than the previous day. This “2%”
amendment was a very positive change considering today’s institutional
involvement. Yesterday’s rally saw all three indices up about 1 ½%.
After poring over stocks this weekend,
I was able to find very little of great interest. One of the names I came across
was Flir Systems
(
FLIR |
Quote |
Chart |
News |
PowerRating). The stock made
a break through its buy point of 47.30 yesterday, on strong trade. Today, the
stock gapped higher before reversing to trade below the pivot.
Last week’s column mentioned how I
will use sentiment indicators such as the Put-to-Call ratio in assessing the
length of a current decline. Another thing to look at that is much more
objective, is how the market reacts to bad news. If stocks are selling off on
any negative news story, then it’s an indication that investors are jumpy and
we are probably not ready to rally. On the other hand, if stocks hold strong on
negative news, it is a sign that things are improving.Â
After today’s close,
Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating) releases earnings. They are expected to
lose one cent for the quarter ending 1/31/02. The market will also place a lot
of emphasis on the guidance they give for their business moving forward. Keep an
eye out for AMAT’s price move tomorrow, following this news. Also keep an eye
out to see how other chip equipment stocks, such as KLA
Tencor
(
KLAC |
Quote |
Chart |
News |
PowerRating) and ATM Inc
(
ATMI |
Quote |
Chart |
News |
PowerRating)
act after the news.
The rest of this week will present the
market with economic news of which we will be able to gauge the market’s
reaction. Retail Sales, Jobless claims and the Producer Price Index are all due
over the next few days.
As always, I welcome your comments and
opinions via email by clicking on my name below.
Until Thursday,