S&P Right At Resistance

October 25, 2001
Dave Landry

On Thursday, the Nasdaq started lower early on
but reversed and rallied to close well.

This action has it nicely above recent
resistance.

The S&P also had a nice turnaround day.
However, it was unable to clear the 1100 resistance level.

So what do we do?
Once again, it’s a bit of a mixed bag. The Nasdaq broke out nicely but
the S&P stopped just short of breaking out. If the S&P stalls,
it could set up some shorting opportunities. Therefore, look to play
both sides. However, as always, wait for entries. This alone will help
to keep you on the right side of the market.

Looking to potential setups, Amerisoucebergan (ABC)
gapped lower (a) but recovered to close well (b). This action suggests
that it might have one more run to old highs left in it.

Kimberly Clark (KMB),
mentioned Wednesday night, still looks poised to resume its downtrend
out of a first pullback since gapping lower.

The Stop Dilemma

Micro Semi (MSCC),
mentioned recently, was up nicely again today (a). However, intra-day,
the stock sold off fairly hard first (b). On volatile stocks like this
(hint: You don’t need complex volatility measurements to know that its
a volatile stock. Simply look at the daily ranges.) you have to give
them some room. For more on placement of stops, see The
Myth Of Tight Stops and other articles on money management
under Traders
Lessons.