Stay Defensive Part 2
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 Wednesday, the Nasdaq gapped lower (a), tried to mount a
minor rally, but failed and sold off to close poorly (b). This brings us about
half way back to the old lows (c) in just one day.
width=”470″ height=”320″>
I guess the next question becomes, so where’s the bottom? For the momentum swing
trader, I don’t think this matters. In fact, I can assure you that I’ll miss the
exact bottom as few stocks will be set up at this juncture. However, on the
first pullback after that bottom/rally, I’ll be back on the long side in full
force. For now though, the trend remains down and mostly speculative
issues continue to set up on the downside. On the upside, fewer, more defensive
issues are about all that are setting up. Sound familiar?Â
Looking
to potential setups, Tenet Healthcare
(
THC |
Quote |
Chart |
News |
PowerRating) (mentioned Monday night), began
rallying out of a Pullback on Wednesday.Â
ICN
Pharmaceuticals
(
ICN |
Quote |
Chart |
News |
PowerRating), on the Pullbacks
Off Highs List, appears to be finding support around the $37 range
(a). This suggests its uptrend remains intact.Â
On the short side, Morgan Stanley Dean Witter
(
MWD |
Quote |
Chart |
News |
PowerRating), mentioned recently, sold off to close poorly on Wednesday. This
suggests its downtrend remains intact.
Continuing on the short side, Level 3 Communications
(
LVLT |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks poised to resume its downtrend.
PC Connection
(
PCCC |
Quote |
Chart |
News |
PowerRating), on the Trading
Where The Action Is List, looks poised to resume its meltdown out of a
four-bar pullback from lows.
Best
of luck with your trading on Thursday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!