The Good In The Bad And No Ugly
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 Monday, the Nasdaq gapped lower (a) and finished on its
low (b). Not much more to say here other than it continues to behave like a bear
market should.
Speaking of bear markets, Gary Kaltblaum recently stated,
“In bear markets, they eventually get ’em all”–a nice way of phrasing
the old Wall Street adage: “They shoot the prettiest women
last*”. I agree with Gary. It seems like everyone is focusing on the
few strong stocks that remain. And this list gets shorter day by day.
The fact that the recent lows (c) held is somewhat encouraging.
What’s scary is, the next support below this is likely in the 2500-2600
range.Â
On the bright side,
there are some positives in the negatives. The fact that the glamours continue
to get dismantled suggests that it may be the beginning of the end. Also, it
seems like the bears are beginning to come out of the woodwork. This
“throwing in the towel” is a good thing.
Another good thing
is the fact that the three-period moving average of the NYSE TRIN hit a 6-month
high on Monday. This suggests that the market is extremely oversold and due for
a bounce. No need to jump in here, but once we get a reversal (a flip
down) in the average TRIN, there may be bounce play.
So what do we do?
This is a tough juncture as oversold could easily become more oversold. However,
if you enter new short positions, we’ll get the bounce that’s due. Therefore,
tread lightly until we get some signals that suggest a tradable bounce is
underway.
Looking to potential setups, Pepsi Bottling Group
(
PBG |
Quote |
Chart |
News |
PowerRating),
on the Pullbacks
Off Highs List, closed well in spite of an earlier sell-off. This suggests
its uptrend remains intact.Â
Stryker Corp.
(
SYK |
Quote |
Chart |
News |
PowerRating)
appears to have formed a “micro” double-bottom in a pullback.
Hewlett Packard
(
HWP |
Quote |
Chart |
News |
PowerRating),
on the Pullbacks
Off Lows List, looks poised to continue its meltdown out of a narrow
consolidation (a.k.a., a flag).
Ensco International
(
ESV |
Quote |
Chart |
News |
PowerRating), on the same list and in the
weak oil service sector
(
$OSX.X |
Quote |
Chart |
News |
PowerRating), looks poised to make another stair-step
lower.
Best
of luck with your trading on Tuesday!Â
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!
P.P.S. Special thanks to Duke Heberlein for filling in while I was away.
Great job Duke…although I am a little embarrassed that you plugged
my upcoming book
on swing
trading at a 20% discount–something I would never do.Â
*This statement was made long before the phrase
“politically correct” was coined. Therefore, if you are a pretty
woman, please don’t email me. No, wait, that would be OK. Wait, checked with
Marcy (my wife), that would not be OK.
Â
Â
.