What I’d Prefer NOT To See On The Weekly Charts

  • October 9, 2003
  • Tim Truebenbach


There’s no doubt we saw some distribution creep into the market
after the wildly bullish gap higher. The major indices all
left tails on the day with volume coming in much higher than yesterday’s
levels (not shown on Supercharts).

image src=”https://tradingmarkets.com/media/2003/Tim/tt100903-10.gif” width=”418″ height=”348″ />


image src=”https://tradingmarkets.com/media/2003/Tim/tt100903-11.gif” width=”418″ height=”348″ />

Recently, this market
has taken its lumps and moved higher anyways.

Internets lead the charge after the Yahoo! earnings and held on strong
into the close. The market itself and recent breakouts have
been seemingly telling a different story.


Network Appliance
(
NTAP |
Quote |
Chart |
News |
PowerRating) attempted a move
through the pivot point of 24.42. Volume
has still not come in to support the move and
the stock is trading slightly lower.

image src=”https://tradingmarkets.com/media/2003/Tim/tt100903-03.gif” width=”383″ height=”326″ />

Evolving
Systems
(
EVOL |
Quote |
Chart |
News |
PowerRating) has been one of the market’s strongest names,
performing in the top 1% of all stocks. After establishing
a flag pattern with a pivot of 14.85, the
stock joined the market in reversing to close
down on above-average
trade. This is another sign of weakness in the market.

image src=”https://tradingmarkets.com/media/2003/Tim/tt100903-04.gif” width=”385″ height=”328″ />


Mercury Interactive
(
MERQ |
Quote |
Chart |
News |
PowerRating)
has shown steady earnings and sales increases. This stock
was also turned away as it attempted to break out through 52.26.

image src=”https://tradingmarkets.com/media/2003/Tim/tt100903-05.gif” width=”382″ height=”328″ />

After talking about all of
the negatives we are seeing, there is still
positive trading to look at.
One glimmer of hope comes from the retailing sector (not to mention the
Internets). Chicos
FAS
(
CHS |
Quote |
Chart |
News |
PowerRating) reported solid September sales and gapped higher this
morning. The stock ripped through its pivot
of 34.04 on one of its highest
volume days ever.

image src=”https://tradingmarkets.com/media/2003/Tim/tt100903-06.gif” width=”381″ height=”325″ />

As we complete this week,
we’ll look to the major averages for some
strength and not to leave a tail on the
weekly charts. Even
though the market remains cautious, we are still in a confirmed rally.
Unless we see consistent distribution in the major averages
and stocks continue to roll over, we remain
in an uptrending market.

In recent weeks, buying
healthy pullbacks has worked well. Stocks that hold their
50-day moving averages
may
very well bounce of this line of support and
move to new highs because that is what they
have been doing.

Have
a great weekend,


Tim Truebenbach

timt@tradingmarkets.com