Upgrade Opportunities

• January 23, 2002
• Dave Floyd

The selling
continues. Despite analysts’ comments and the clever
“break-up” of Tyco, it appears that investors continue to focus
on what is truly occurring, not, as they have done in the past, what may happen,
or what stock-promoters say. There are a few upgrades out today which may offer
the aggressive trader an opportunity. This morning, Amgen
(
AMGN |
Quote |
Chart |
News |
PowerRating) and
Teradyne
(
TER |
Quote |
Chart |
News |
PowerRating) were both upgraded. I won’t get into the reasons, but
if you have been following the tape for the last week or so, you will know how
beaten-up the respective sectors have been. 

I won’t debate the merits of the
upgrades since it involves a longer time frame, but it may offer a nice trade
off the opening print as buy orders overwhelm current offers. (In fact, the
Amgen upgrade, if done form a technical perspective, shows the stock putting in
a nice base around the 54 level.) This type of trade, “fading the
opening,” is risky, but can work quite well in these situations for those
who are nimble. 

I expect the intraday volatility to
continue in Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating). Yesterday’s opening print, a full $5 higher
than the close on Friday, stopped just shy of the 200-day moving average. It
never printed there again. In fact, Tyco closed near the lows for the day. A
“break-up” of the company does not change the overall shortcomings of
the current business cycle, but it was a nice try. Investors and traders faded
that move with fervor.

Key
Technical Numbers

As always, feel free to send me your
comments and questions. As I mentioned in yesterday’s
column, I will attempt to highlight some intraday setups (non-scalps) as I
see them in TradersWire. 
These trades will typically be initiated off of hourly and 15-min charts.

Dave