Stay Defensive

  • November 27, 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.

Special thanks to Duke Heberlein
for filling in while I was away.

On Monday, the Nasdaq popped open higher (a) but that was
about all it did higher. After briefly flirting with 3000,  it reversed and
trended lower the remainder of the day.  This action has it closing on its
low (b).

If you are new to trading, this is known as a “pop
up” opening. Always be leery of such pre-market euphoria, especially in a
bear market.

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So what do we do?
With the drugs breaking out to new highs and technology hitting new lows, it
appears we remain in defense mode. Therefore, stick with defensive issues on the
long side and consider a short or two.

Looking to potential setups, in spite of a false start on
Monday, Respironics
(
RESP |
Quote |
Chart |
News |
PowerRating), on the  Pullbacks
Off Highs List, still looks like it has the potential to rally out of a
pullback.

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For you breakout
players, NCR Corp.
(
NCR |
Quote |
Chart |
News |
PowerRating), on the  Proprietary
Momentum List, broke to new highs on an expansion of range out of a high-level consolidation.

On the short side,
Tektronix
(
TEK |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Lows List, rallied earlier on Monday but reversed to close poorly.
This suggests its downtrend remains intact.

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Verisign
(
VRSN |
Quote |
Chart |
News |
PowerRating),
on the Trading
Where The Action Is List, 
gapped higher on the open but reversed to close poorly. This action forms a
bearish outside day down and suggest it remains in a downtrend.

Best
of luck with your trading on Tuesday! 

face=”Arial, Helvetica”>Dave Landry

P.S. Reminder:
Protective stops on every trade!

P.P.S. Don’t worry, now that I’m back I will no longer plug my upcoming book
on swing
trading at a 20% discount.

 

 

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