To the thread, a few random thoughts,
Chaos Theory: the butterfly was the CPI report. Currently multiple gravity wells exist but it is hard to decipher the strongest attractor much less the true spin glass. <G>
What can we know?
The DOW at least showed the Diamond. It confirmed and transitioned to a Head and shoulders last week, and the paper regarding the "noise traders" was on track. Obviously, more volatility ahead for the markets, but understand once the margin issue is put to rest this week we are probably range bound then the Greenspan effect will start to take over.
First know the chart pattern. Be it the potential of the power "W" or the weakness of the "M" they are but mere reflections of another.
Expect downward pressure at the open Monday (the first hour of trading is considered amature hour so exploit it) with hopefully, a relief rally at somepoint during the day. Downward pressure at first because some poor individuals on Thursday were trying to get loans to cover margin calls for options expiration this Thursday. The CPI only made things worse, and it's hard to get a loan when you really need it...thus carry through on Monday, probably some sad people sitting out on Long Island, NY and Newport Beach, CA this weekend. The pro's/big houses will not buy at the bell since they know they can wait and get a lower price) Examine charts on the DOW and NAZ for this year. You will see some W's. The dow in late Feb to early Mar signaled a run. The NAZ, mid march a double top fail but you can see the inverted W or an M.
Also, regarding the W, be sure to check out charts of the NAZ, DOW, S&P 500 from AUG '98 through about MAR/APR '99. If you plan to buy and sell in here, understanding the W will make your job easier.
Intra day Friday, DOW attempted to form a W in mid-day at 10,570 or so then fell. Near term it may try to return there. On the downside the DOW would attempt a retest vic 9,800-9,900. The NAZ is a little harder to decipher. It tried to hold between 3,390 and 3,515 on a failed W (the right leg could not be established) and sold off. If the NAZ should rally then it will seek that level initially. At this point, I'm considering 3,600-3,700 a relative top; new NAZ trading positions put on starting Monday or later would be sold at that level.
Interesting Stocks for trading during this volatile time, watch in case a buying opportunity presents.
CIEN looking good...with room possibly to $120
BRCM...chart looks bad, but it's a falling wedge indicating a potential bullish trend if the NAZ reverses
BVSN...interesting with room to $60 on a reversal
CNXT...chart as with BRCM looks bad. Even though the parameters have not swung up yet, I think it has about bottomed out and can go higher from here on a NAZ reversal.
It's a bad market but if the NAZ moves up, these two will move up faster and if a downturn develops fall slower. If I see any strength developing in the NAZ Monday, I'll be taking positions in them.
a. SUNW...very impressive showing on Thursday and Friday. The stock did not want to go down, people did not want to sell this stock. On a bounce back it will be among one of the first techs bought and will outperform on any retracement in the NAZ.
b. ASPT...at first glance, quite a ride down; but do my eyes deceive me? a small lesser known NAZ stock with indicators that have bottomed, it wants to reverse even without the NAZ providing cover! Could be a nice trade to the $37 level on a reversal. The chart pattern makes me wonder if the stock is under accumulation and if so...
What I'm planning on buying Monday.
DELL (sold a year or so ago at $42) and WCOM (sold at $48 or so) were sold out of my core holdings and have been on probation. I will be adding them back into the portfolio.
25% of the DELL at this time.
50% of the WCOM with 1/2 shares WCOM and 1/2 shares FON in the initial buy. Will also nibble at WCOM LEAPS.
What I'm selling Monday, most likely within the first 30 minutes
I'm closing out the NDX puts and will probably sell around 60- 80% of the DJX puts
Regards to all and hang tough,
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