Stay Defensive
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.
On Tuesday, the Nasdaq lapped higher and began to rally.
However, it found high by noon and was unable to take out last Friday’s high,
which also corresponds to recent resistance (a). The index then sold off for the
remainder of the day and closed poorly.
Tuesday’s poor close after a failed rally adds to the case
that we are still in a pullback from lows and those lows (3026) could still be
challenged.
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So what do we do? At the risk of being boring and redundant, I still think the
more defensive issues on the upside and the speculative issues on the downside
remain your best bet.
Looking
to potential setups, Astropower
(
APWR |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, looks poised to rally out of a deep pullback.
Even
though Tenet Healthcare
(
THC |
Quote |
Chart |
News |
PowerRating) (mentioned Monday night) stalled out after
rallying earlier in the day, the stock still looks like it has the potential to
rally out of a pullback.
On the short side, the Technology Spyders
(
XLK |
Quote |
Chart |
News |
PowerRating),
mentioned Monday night, appear to be resuming their downtrend.
Natural Microsystems
(
NMSS |
Quote |
Chart |
News |
PowerRating), also
mentioned Monday night, appears to be resuming its downtrend out of a four-bar
pullback from lows (a).
Continuing on the short side, Level 3 Communications
(
LVLT |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks poised to resume its downtrend.
ADC Telecom
(
ADCT |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Lows List, looks poised to make another “stair-step”
lower.
Best
of luck with your trading on Wednesday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!