The Song Remains The Same

November 26, 2001
Dave Landry

On Monday, the Nasdaq gapped higher but sold off
early. However, it found its low and rallied for mostly a trend day
higher. This action has it closing well and at fresh multi-month
highs.

The S&P also recovered nicely after an early
morning sell-off.

So what do we do? I
guess the song remains the same. The market remains overbought,
but the tape remains strong. Who are we to fight it? Therefore,
continue to focus on the long side, but, as always during overbought
conditions, don’t completely forget about the short side. Just make
sure you wait for entries.

Looking to potential setups, Silicon Labs (SLAB),
mentioned recently, appears to be rallying out of a pullback.

On the short side,
Engineering Support Systems (EASI),
in the formerly
hot defense sector, looks poised to break down out of an inverted cup
and handle.

Still On The Trail

When we last left off, we were trailing a two-bar
stop on Boston Scientific (BSX),
a stock mentioned recently (see archives for more details).
Below I have updated the chart. As you can see, so far,
this simple technique has caught a nice move.