Intraday’s STALK SHEET for Wednesday, June 13 2001
After today’s afternoon rally in the Nasdaq, the index is now sitting in the middle of its trading range that was established in mid-April, between the 2050 and 2300 area. This is apparent looking at the daily chart; back off to the monthly timeframe and you’ll observe that the Nasdaq is still absorbing a sharp corrective wave after an amazing run from this evel (Jan 99) to 5132 in March of 2000. It is not yet apparent from our perspective whether the Nasdaq will resolve it’s trading range to the upside – or, break towards the lows (1620) set just nine weeks ago. With the CBOE volatility index (VIX) contracting to low levels not seen since September of 2000 (which often can signal an impending sharp move in the markets), the summer’s trading should prove interesting. May we live in interesting times!
Although the Nasdaq closed near its highs of the session Tuesday, it rallied right up into its overhead resistance, so it will be interesting to see if there is any more upside follow-through tomorrow -- or maybe, the Naz will trade back down towards today’s lows. As we noted late in the session, the techs rolled over just as the $COMPX traded into the 200MA in the 60min timeframe, leaving a Bearish tail for us to ponder overnight, with the futures no clues as of late Tuesday. As a result, we are providing plays on both sides of the market and will adjust our trading strategy early in the session as appropriate.
Action in the Semiconductor sector has been a focal point for market watchers as the SOX rallied to retrace its lows today to leave a Bullish candle/tail formation on the daily. Since this formation occurred at the end of several days of selling, it is likely that we will see some attempted follow-through to the upside in this sector tomorrow (we are long CRUS overnight). However, as we reminded you in today’s seminar, make sure you always remember our rules for volume (125% – 150% of a stock’s average volume of the past five days).
The Networking Index rallied impressively after two days down hard to form a bullish hammer and closed at its high of the day after testing support at the 400 area. This sector appears poised for more follow-through to the upside tomorrow. EXTR was unusually strong on high volume, probably due to their involvement in the Metropolitan Ethernet formum, which was announced today (http://www.metroethernetforum.org) and already involves 37 companies. This technology will be a bit of a Godsend to traders, bringing a plethora of newer, better, and badder fast access providers to your doorstep in probably 3-4 years (goodbye DSL!) so stay tuned… and maybe let’s bid up EXTR tomorrow if there is follow-through! BRCD also looks like a winner for Wednesday if it can trade through $48 with strong NWX/Futures as confirmation.
Steve, Deron, & Ed
General Partners
Intraday Investments
http://www.intradayinvestments.com
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POTENTIAL LONGS:
INTC Intel Corp. Long > 30.35 Semiconductor/CPU sector
Reversal on daily today, anticipating follow-through tomorrow and will look to enter once we break above today’s high. $SOX.X
BRCM Broadcom Long > 39.00, Semiconductor/Mixed-signal sector
We will look to enter long on break above both 20 and 40 period MA on daily chart, as well as break above past two days’ resistance. $SOX.X
XLNX Xilinx Long > 46.50, Semiconductor/ASIC sector
We will look to enter long on break above both 20 and 40 period MA on daily, as well as a break above most resistance of past week. $SOX.X
NVDA Nvidia Long > 100, Semiconductor/Graphics sector
With the stock approaching a new all-time high for the third time, a break through 100 on this attempt has a pretty good chance of holding. We will look to enter on a pullback after breaking through our alert price, assuming breakout volume is strong. $SOX.X
And by all means, check out the “Leaders & Success” story on page A4 of today’s (Tuesday 6/12) Investor’s Business Daily describing NVDA’s 36-year old co-founder/CEO… he’s such a nice guy that we may have to change “the devil’s” nickname!
NSM National Semi Long > 28.50, Semiconductor/Mixed-Signal sector
This is the fourth attempt for NSM to break through its 200 MA on the daily. The odds are great it will succeed on this attempt if volume is strong. We will look to enter above today’s high on good volume. $SOX.X
FDRY Foundry Networks Long > 20.50, Networkers/Enterprise Switching sector
We really like this play because today was the highest volume that FDRY has seen in about three weeks, which pushed it back above its 20 and 40 period MA on the daily. Will look to enter on a breakout above recent consolidation area at 20. $NWX.X
BRCD Brocade Long > 48.00, Networkers/SAN-Fiber Channel sector
This stock broke above resistance of the past week into today’s close on increasing volume and OBV. Once it breaks above 48 on high volume, not much in the way until 50. Also has a rising 20 MA underneath to serve as support. $NWX.X
GLW Corning Long > 18.59, Networkers/Optical Components sector
Looks like GLW had high selling volume today, as well as formed a bullish hammer after closing at today’s high. This indicates a likely reversal in the coming days. Will look to enter after a break above the upper channel of downtrend of past week. $NWX.X
RBAK Redback Networks Long > 14.25, Networkers/Carrier Access sector
Double bottom formed at 13 today, which attracted a lot of buying interest, as evidenced by today’s strong volume. We will look to enter on a breakout above resistance of the past three days at 14.25. $NWX.X
POTENTIAL SHORTS:
MRK Merck Short < 73.00, Drugs/Conglomerate sector
Although MRK rallied off its lows today, it failed to retrace even half of yesterday’s losses, and it even attempted it on strong volume. Any weakness in the DRG sector will likely lead MRK lower. Once below 72, there is not much support to catch MRK, but we will look to short at any price below today’s highs. $DRG.X
LLY Eli-Lilly Short < 85.90, Drug sector
Will look to short on a break below the 20 period MA with a downside target of the 40 period MA. $DRG.X
WMT Wal-Mart Short <50.80, Retail/Drugstore sector
Wal-Mart rallied right up to the upper channel of its downtrend line that has been in effect for the past three weeks. Will look to short at the area of this upper channel. $RLX.X
P Phillips Petroleum Short < 61.50, Oil/Producer-Refiner sector
Phillips looks poised to break below its support of 62, which would likely cause a break below its rising 20 MA at 61.65. Will look to short below both of these points, with a target of 60. $XOI.X
OXY Occidental Petroleum Short < 29.25, Oil/Producer-Refiner sector
Will look to short on a high-volume break below the rising 40-period MA. $XOI.X
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