Slow Drip Continues

  • July 11, 2002
  • Dave Floyd

The
slow drip continues. Naturally, if you were to
be a contrarian to the mainstream you would have to say, “I am a buyer in
here.” Naturally this is foolhardy, since all the bears said the same thing
during the hype-driven orgy of the late 1990s. Nonetheless, everything I heard
all last night on CNBC World (actually a
great broadcast, unlike the domestic version) was, “It looks like capitulation”;
“Could be a vertical down day”; and “Now that that five-year head-and-shoulders
pattern has played out…look out!” 

I’ll be the first to say all three of
these scenarios WILL happen, I am just not so sure it will be when everyone is
expecting it. A close friend whose uncle is a long-time broker told me the
office where his uncle works was a “tomb” yesterday, with account closings on
the rise. These guys are truly in shock. However, in the interest of capital
preservation and not looking like a fool, I am not going to make any bold
predictions.

Naturally, from a longer
term-perspective, 5- and 15-minute charts, selling short the rallies is the only
way to go. I do recommend tightening your stops though, as with each passing
day, a vicious short-term reversal is in the cards. I was not able to trade
yesterday so I cannot really comment on the action from an
HVT standpoint. Several colleagues gave mixed reviews. It is
summer, so, even with good intraday range, the low-volume makes it a bit more
difficult.

I see several setups to the long side,
but no confirmation from the market. Patience. 

Apollo
Group
(
APOL |
Quote |
Chart |
News |
PowerRating): 60-minute chart, break above
$38.80 with the market at your back looks interesting.

United
Health Care
(
UNH |
Quote |
Chart |
News |
PowerRating): Daily chart, holding
minor support and above 50-day moving average. A break above $92.25 with the
market at your back looks
interesting.

In the meantime, these stocks are
resuming their downtrends on longer time frames:

Noble
Drilling
(
NE |
Quote |
Chart |
News |
PowerRating): 60 minute chart, lower trend
channel has been broken, 35.30 potential target.

Key
Technical Numbers: (futures)


S&P’s   		 Nasdaq
935  989
931.5  978
918-20    962.5
905      952
890   946
884   933
   923

At the risk of sounding like a broken
record, “Trade assertively and selectively.” And as always, feel free to send me your
comments and questions. See you in TradersWire.


Dave