Summertime Blues
On Tuesday, the Nasdaq opened higher but reversed in early
trading. However it quickly found its low and began to rally. The rally
accelerated going into the afternoon. This action has it closing well and near
the top of its recent trading range.
The S&P also reversed after dipping earlier in the day.
This action has it right at a resistance level.
So what do we do? The intraday volatility and lack of
day-to-day follow through makes it difficult to swing trade. In other words, it
looks like a late-summer pattern to me, especially in the individual issues.
Therefore, I would continue to keep it light until everyone gets back from
vacation or we get a more definable trend.
Looking to potential setups, the biotechs continue to shape
up. Today (Wednesday), for instance, they reversed after trading lower. This
action sets up another (bigger picture) low-level cup and handle.
Considering the above, Medicis Pharmaceutica
(
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looks like it has the potential to rally out of a cup and handle.
Email Of The Day
I have a question for you. If youre 6 year old can see it how come you were wrong for most of the last month. Your columns over the last month basically said that we were always oversold yet we continued to sell off . Then when occasionally when youre bias was short you said to play it light and on those days we had huge down moves. If you go over youre last 30 days you were mostly incorrect. Great futures traders were cleaning up while you were always playing it light if at all on the short side claiming that we were oversold.
Then on the upmoves you were thinking we would pullback after 2 or 3 days which we did not.
Gregory Lupu
Mr. Lupu,
I went back one month and pulled up every
stock I recommended* during that period. This is what I found:
On, 08/08/2002 I recommended shorting the SMH. The
trigger here, below the prior day’s low, would have been 24.50. The SMH hit a
low today of 23.50*.
On, 08/07/2002 I recommended going long DNA. The trigger
here, above the prior day’s high, would have been in the 33.10 range. The stock
gaps open to 33.50. On 08/12, the stock closed at 35.45.
On 08/05/2002 I recommended going long the IBB and BBH. The
triggers respectively would have been 49.60 and 82.15. On 08/12/2002, the IBB
closed at 53.72 and the BBH closed at 89.
On 08/01/2002 I recommended going short CB. The trigger
here, below the prior day’s low, would have been 63.63. On 08/06/2002, CB closed
at 59.36.
On 07/26/2002 I recommended going short BAC. The trigger
here, below the prior day’s low, would have been 59.70. No trigger.
On 07/18/2002 I recommended shorting BHI. The trigger here,
below the prior day’s low, would have been 28.83. The stock gaps open triggering
an entry at 28.60. On 07/23/2002 the stock closed at 24.94.
On 07/16/2002, I recommended shorting CHIR. The trigger
here, below the prior day’s low, would have been 28.90. No trigger.
So, according to my records (I used the archives on the
side of this page and so can you), I was not, to quote you, “mostly
incorrect.” In reality, if you (hypothetically) entered at the triggers,
trailed stops and took partial profits, you’ll see that I was actually 100%
correct** on my stock picks during this period.
Best of luck with
your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*I used the word
“recommended” for lack of a better word. As you know, this column is
for educational purposes only.
**Disclaimers: Depending on how you view the SMH
trade, it could be considered a scratch/small loss (but I think I made my point
with the rest of the trades). Past performance is no guarantee of
future performance. Results not typical, your results may vary. Close box before
striking. Objects in mirror are closer than they appear. In case of rash,
discontinue use. Do not operate heavy machinery while on medication.
Consult your physician. Women who are pregnant should not consume alcoholic
beverages. The surgeon general warns that smoking is hazardous to your health.