The Song Remains The Same

March 15, 2002
Dave Landry

On Friday, the Nasdaq opened flat to lower and then chopped
it way higher in a narrow range. Finally, it ended near its highs to close well.

The S&P put in a more solid performance. It looks like
it has the potential to challenge the 1180 resistance level.

The VIX is approaching one-year lows. What’s more important
is that it is beginning to get stretched away from its 10-day moving average
(difficult to see below).

So what do we do? The tape remains strong but I’m still
concerned about the low VIX, especially since it is now starting to stretch away
from its 10-day moving average. Can the market go higher with a low VIX? Sure,
it can do anything it wants to do. However, history shows the the market tends
to correct after low readings, especially once itÂ gets stretched away from
its moving average. Therefore, I think I’m going to stick with my recent mantra:
Continue
to play chicken. As mentioned recently, this means sticking with issues that have
outperformed the market beforeÂ the recent run up and have had
orderly corrections as of late. These include defense, consumer non-durable and
gaming-resorts (note: I left out the homebuilders on purpose. They were weak on
Friday. For now, wait to see if they can reverse back in the direction of their
uptrend.).

Looking to potential setups, Mandalay Resort Group
(
MBG |
Quote |
Chart |
News |
PowerRating),
mentioned recently as a Trend Pivot Pullback, appears to be attempting to resume
its uptrend. Continue to watch to see if it can take out last Friday’s pivot high
(a).

Smoke ’em If You Got ’em

Alberto Culver
(
ACV |
Quote |
Chart |
News |
PowerRating) is up nicely since first mentioned
(a). When blessed with a nice swing trade profit, don’t be afraid to lock in a
piece and tighten your stop. See my articles on money
management and archives of this commentary for more on the subject.