Why You Should Take It One Day At A Time

February 21, 2003
Dave Landry

On Friday, the Nasdaq opened flat and after a brief bounce,
sold off fairly hard on jitters that the refinery fire could be an act of
terrorism. However, it quickly reversed and generally worked its way higher
throughout the day. This action puts it near its 50-day moving average.

The S&P put in a similar performance. The top of its
recent trading range/bottom of its topping formation(a)/50-day moving average
(which should be in that area soon) could provide resistance here.

So what do we do? The outside day reversals in the
indices are impressive. However, I see no reason to get excited about just one
bullish day. I’d prefer to wait and see what next week brings. At the risk of
boring you, there remain numerous sectors that are in strong downtrends such as defense, retail, broker/dealer (and other financial), utilities, transports, banks and
telecom . Therefore, continue to focus on the short side but wait for entries in
light of Friday’s bounce.

Looking to potential setups, Alliance Capital Management
(
AC |
Quote |
Chart |
News |
PowerRating),
mentioned Thursday and in the weak financial services-asset management sector,
still looks like it has
the potential to resume its strong downtrend out of a pullback.