What A Tail Can Tell You
Blue-chip equity indexes tested 10-day lows this morning
but strength in big-cap techs have resulted in “tail” bar patterns at
mid-session in a pattern that often marks the reversal of a recent trend.
The S&P 500 is up 1.15 at 1257.33, the Dow is up 33
at 10,946, and the Nasdaq is up 27.62 at 2138.11.
Top traders look closely at tails. Jeff Cooper calls them
either “Lizards” or “Iguanas,” depending on if the bars are
daily or weekly and shares how he uses them in his Hit And Run Trading
books. Goran Yordanoff also currently has a trading lesson called Tails
Seldom Fail — One Of My Favorite Patterns on the TradingMarkets Home
Page.
In short, tails show a test and a repudiation of a
certain level. The S&P 500 and the Dow both tested their 10-day lows and are
showing they are willing to finish the day near their highs, a sign of
strength.
Semiconductors are providing the backbone of strength in
tech after chip equipment maker Novellus
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earnings by a penny.
While Novellus is the biggest gainer on the semiconductor
index
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gainer. Since it is a key representative on all three major indices, its 5% gain
to 28.48 is underlying gains in the broad market.
Gains in tech giants Microsoft
(
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70.07 and IBM
(
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Besides semis, biotech
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and insurance
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In biotech, this stock has a very complex but stealthy
pattern and is noteworthy if considered in the light of its past month’s
behavior. Shire Pharmaceutical’s
(
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shows a penchant for a possible break to a new multi-month high. Today, SHPGY
gapped to a one-month high, repeating thrusts on May 8 and May 21 in a potential
one-month, triple-top breakout. Interestingly, the second- and third-highest daily volume ever in this stock have come when this stock
was picked up off the lows during the past month’s consolidation at the 50-day
moving average, signs of stealth accumulation. The second-highest monthly
volume ever came during the past 30 days as well. SHPGY continues to make gains
throughout the session and is up 1.66 at 51.26.
A potential acquisition target, another biotech, Imclone
(
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of this stock is definitely something to keep and eye on. Volume is already 30%
above normal. The stock has a critical mass — more than five — laps, gaps or
thrusts in in the past three weeks, a collective sign of a runaway. Imclone may
be rising on speculation that it will be a takeout candidate by Bristol Meyers
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a drug outfit that needs a biotech arm. IMCL’s market cap is $3.34 billion. BMY
is $105 billion. BMY is the fourth strongest stock on the S&P 500 today, up
1.52 at 55.56. IMCL is up 3.00 at 52.65.