Way Oversold
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
markets opening. Therefore, overnight events may alter the
outcome of these observations.
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On
Monday, the Nasdaq opened slightly higher (a) but found high early on. It then
sold off and closed poorly for a solid trend day lower. This puts it right at
prior support level (c). If this is broken, the August lows (d) will be
the next likely target.
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So what do we do? The market is way oversold,
but that doesn’t mean it can’t go lower. Try to buy and it will, try to
short and that bounce from oversold will show up. I suppose the best
advice would be to continue to tread lightly and protect capital for better
days.
face=”Arial, Helvetica”>Looking to potential setups, many of the utilities
(
$UTY.X |
Quote |
Chart |
News |
PowerRating)
are set up as pullbacks of stocks in fast trends. Take your pick: Southern
Company
(
SO |
Quote |
Chart |
News |
PowerRating) is a three-bar pullback and Carolina Power & Light
(
CPL |
Quote |
Chart |
News |
PowerRating),
Cinergy
(
CIN |
Quote |
Chart |
News |
PowerRating) and Texas Utilities
(
TXU |
Quote |
Chart |
News |
PowerRating) are Trend Pivot Pullbacks (TPPs).Â
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In the energies, Constellation Energy Group
(
CEG |
Quote |
Chart |
News |
PowerRating),
mentioned Friday and on the Pullbacks
Off Highs List, still looks poised to resume its fast uptrend.
On the short side, Genzyme
(
GENZ |
Quote |
Chart |
News |
PowerRating), on the
Stocks Crossing Below Their 50-day Exponential Moving Averages on Double-Volume
List, failed on Monday after a return rally back above its 50-day ema.
Allegiance Telecom
(
ALGX |
Quote |
Chart |
News |
PowerRating), mentioned
Friday night, appears to be resuming its downtrend.
Best
of luck with your trading on Tuesday!
face=”Arial, Helvetica”>Dave Landry
P.S. Reminder:
Protective stops on every trade!