Reversal From Key Support

June 12, 2001
Dave Landry

On Tuesday, the Nasdaq gapped down and continued lower.
However, it found its low early on. Then, after chopping around a bit, it
mounted the mother-of-all comebacks. This action has it closing well.

We’ll score Tuesday’s action as a positive, as the 2100
support level and the 50-day moving average held.

The S&P tailed down to its
1240 support level/50-day moving average,
before recovering to close well.

So what do we do? Today’s reversal is very encouraging. I’m
still somewhat concerned about the relatively low VIX readings. However, I think
that the oversold nature of the market, combined with the indices finding
support and reversing at key support levels, suggests we could rally into
expiration (Friday). With that said, the biotechs still look most interesting to
me.

The Biotech Index tailed lower (a), but reversed to close
fairly well. This, in spite of a large drop in Affymetrix (AFFX),
one of its components. BTW, if you want to look at the stocks that make up this
index click here.

The individual stocks look
better than the index itself. Let’s look at a few.

Celgene (CELG),
mentioned recently and on theÂ Pullbacks
Off Highs List, still looks like it has the potential to resume its strong
uptrend out of a pullback.

Protein Design Labs (PDLI),
mentioned recently, gapped lower on the open,
but reversed to close well. This action suggests that its uptrend remains
intact.