Remain Cautious

December 13, 2000
Dave Landry

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
market’s opening. Therefore, overnight events may alter the
outcome of these observations.

On
Wednesday, the Nasdaq lapped open to near its high for the day (a) and then sold
off to close poorly (b) for a solid trend day lower.Â
3,000-ish (c) remains resistance to the upside and the old lows (d)
remain a likely target to the downside.

src=”https://tradingmarkets.com/media/images/Landry2/otc121300.gif”>Some
of the tools that I
use when determining trend include moving average slope (positive slope for
uptrends and negative slope for downtrends) and Daylight (highs less than the
moving average(s) for downtrends and lows greater than the moving average(s) for
uptrends).Â Notice above that the slope of the 50-day simple moving average has
been negative for months. Also notice that there has been “Daylight”
during the same period.Â As you can
see, simple techniques such as these will help to keep you on the right side of
the market.Â For a refresher on
moving averages and how I use them, see my three-part
series on the subject under Trader’s Lessons.

So what do we do?
Today’s action once again confirms the poor tone. Therefore, continue to remain
cautious and consider a short or two.

Looking to potential
setups, Astoria Financial
(
ASFC |
Quote |
Chart |
News |
PowerRating), on theÂ Proprietary
Momentum List, has formed a shallow pullback and looks poised to resume
its strong uptrend.

src=”https://tradingmarkets.com/media/images/Landry2/asfc121300.gif” width=”470″ height=”320″>

Genzyme
(
GENZ |
Quote |
Chart |
News |
PowerRating),
on the Pullbacks
Off Highs List, has formed a flag/three-bar pullback and looks poised to
resume its breakout.

Echostar Communications
(
DISH |
Quote |
Chart |
News |
PowerRating), mentioned Tuesday night and on the Pullbacks
Off Lows List, still looks vulnerable.

face=”Arial, Helvetica”>src=”https://tradingmarkets.com/media/images/Landry2/dish121200.gif” width=”470″ height=”320″>

Professional
Detailing
(
PDII |
Quote |
Chart |
News |
PowerRating), on the Proprietary
Implosion List, has formed an inverted cup and looks poised to resume its
meltdown.