Say Hello To My Little Friend

November 27, 2001
Dave Landry

On Tuesday, the Nasdaq started off weak but found its low early morning, and
mounted an impressive rally that lasted most of the day. However, late in the
day it sold off to end up just about where it started.

The late day reversal in the S&P was more severe.

So what do we do? I left
my screens about a half-hour before the close feeling pretty bullish. When I
returned, I was surprised to see how much the market had given up. I think
overall the tape remains strong,
but this action has me slightly cautious. Maybe this is the start of a
correction from an overbought condition,
or maybe not. I’ll tell you tomorrow. When I’m unsure like this, I turn to my
old friend money management. He suggests that I wait for entries, honor my
stops, trail my stops,
and take partial profits when offered. What a great friend!

Looking to potential setups, Silicon Labs (SLAB),
still looks poised to rally out of a pullback.

Storage Technology (STK)
looks like it has the potential to resume its strong uptrend out of a Trend
Pivot Pullback.

Off The Trail

When we last left off, we were trailing a two-bar stop on
Boston Scientific (BSX),
a stock mentioned recently (see archives for more details). Below I have updated
the chart. Today, we got knocked out of the position. As you can see, this
simple trailing stop technique caught a nice move. BTW, the stock is starting to
look interesting again..