Watch The Nature Of The Selling

March 4, 2003
Dave Landry

On Tuesday, the Nasdaq chopped back and forth throughout
the morning. It then generally sold off for the rest of the day. This action has
it closing poorly.

The S&P was hit much harder.

So what do we do? The Dow closed at multi-month lows
and the S&P is just above those levels. The fact that “real”
stocks (e.g., blue chips) are being sold suggests that the markets remain
vulnerable. Therefore, continue to focus on the short side. At the risk of
boring you to death, the game plan remains essentially the same: Continue to keep it light due to recent choppy action and the
fact that we remain in a fickle news-driven environment. On the long side, stick
with selected areas of energy (e.g., independent oil & gas) since they can trade contra to the overall market.
And, once again, continue to use the news to your advantage: On the rallies, look for potential candidates to short.
On the sell offs, look to lock in profits and tighten stops on existing shorts.

Looking to potential setups, Ecana
Corp.
(
ECA |
Quote |
Chart |
News |
PowerRating),
mentioned recently and in the
strong independent oil sector(a), still looks like it has the potential to continue
higher out of its first pullback since breaking out of a high-level base.

Smoke ’em If You Got ’em

Dupont
(
DD |
Quote |
Chart |
News |
PowerRating) has moved nicely lower since first mentioned
(a). When blessed with a profit, make sure you lock in a piece an move you stop
to breakeven.