Intraday Investments Stalk Sheet for Wednesday, June 20, 2001
First of all, we wish to give our members a reminder to use extra caution on BOTH sides of the markets today. The Dow closed below critical support by breaching the 200 m/a on the daily chart. Below 10,563, the next serious support on the Dow isn't until 10,444. We will look to go short the Diamonds if the Dow trades below yesterday's low of 10,563. Below 10,444 the Dow could see the critical 10,200 support level over the next couple of days. Both the Dow and the Nasdaq are hovering around critical support levels and could easily break through support, which would quickly accelerate downside momentum OR they could rally off these support levels with a vengeance, effectively creating a pretty significant short squeeze. That’s why we say it is really important to use caution today. Remember to use tight stops, take profits quickly, and keep share size smaller than usual. These three things will reduce your overall risk in trading today.
On Tuesday, the Semiconductor Sector traded down to just above the lows set on May 30 before recovering slightly into the close. As of right now, support stands at the 579 area. We will likely see a rally off this support level on any strength in the Nasdaq today. As always, however, it will be important to watch the volume.
Although the Networking Sector broke the critical support level of 340 two days ago, it is now technically oversold (based on divergence between the RSI and the price action of the sector). We’re not looking for a huge reversal or rally in the sector, but we do expect a technical bounce in this sector during the next day or two. This comes after eight consecutive days of selling and a closing price almost equal to the opening price on Tuesday (doji star). This typically indicates a temporary reversal of the trend (which is down in this case).
The Biotech Sector has broken it's trendline and is sitting on its last leg of support on the 40 m/a (daily chart). Several stocks in this sector have already lost support. If we see any type of recovery in the Semis or Networkers, that could spell doom for the Biotechs due to sector rotation (as it is not uncommon for money to flow out of Biotechs into technology).
If we experience a gap-down on Wednesday, we will look at some of the same long positions on today’s Stalk Sheet for possible entries on the long side to fade the gap down, even though the alert prices would not likely be triggered. However, several factors will determine whether or not we do this, including the volume of the gap down, the breadth, and other market internals we will be assessing. We will guide you and provide our thoughts regarding this in the Online Trading Center once the markets opens.
Potential Longs:
CIEN, Ciena Corp., Long > 37.50, Networking Sector, $NWX.X
Ciena is potentially forming a double bottom off the lows set in early April. Capitulating selling volume on Tuesday, as well as a retracement off the lows into the close. Looking for a bounce off the April lows after five consecutive days of lower closing prices.
JNPR, Juniper Networks, Long > 29.55, Networking Sector, $NWX.X
Similar situation as with Ciena (potential double bottom off April lows). The fact that Juniper closed slightly above Monday’s closing price is bullish and indicates the stock is starting to show signs of relative strength. A break above 29.55 would represent a break above the upper channel of the downtrend line that started on June 12 (on a sixty-minute chart).
GLW, Corning, Inc., Long > 13.60, Networking Sector, $NWX.X
It appears the sellers are drying up, as the downside volume has been declining for the past three days and the stock is now forming narrow-range candles on the daily. In addition, Tuesday’s trading range was inside of the previous day, which also means that it failed to breach Monday’s lows. We will look to go long on a break above Tuesday afternoon’s congestion band and Monday’s close, both of which will likely serve as resistance.
EXTR, Extreme Networks, Long > 25.25, Networking Sector, $NWX.X
Similar situation to Corning (inside day on Tuesday with a higher low than Monday, as well as a positive close). We will look to go long on a break above Tuesday afternoon’s congestion band and Friday’s close, both of which will likely serve as resistance.
TXN, Texas Instruments, Long > 30.65, Semiconductor Sector, $SOX.X
A break above 30.65 would represent a break above the upper channel of the downtrend line that started on June 7 (on a sixty-minute chart). In addition, this would put the stock above the opening lows that were set on June 15, which is likely to serve as resistance.
PMCS, PMC-Sierra, Long > 25.60, Semiconductor Sector, $SOX.X
Notice the high volume rally that PMCS saw during the final thirty minutes of Tuesday’s session. This buying momentum is likely to follow-through on any strength in the markets and we will look to go long on a break above Tuesday afternoon’s congestion band and Monday’s close, both of which will likely serve as resistance.
IDTI, Long > 28.65, Semiconductor Sector, $SOX.X
Notice the high volume rally that this stock saw during the final thirty minutes of Tuesday’s session. This buying momentum is likely to follow-through on any strength in the markets and we will look to go long on a break above Tuesday afternoon’s congestion band and Monday’s close, both of which will likely serve as resistance (same exact setup criteria as PMCS).
Potential shorts:
CELG, Celgene, Short < 29.50, Biotech Sector, $BTK.X
Below 29.50, the next support for this stock is 28.45. But below 28.45 it's clear sailing south. Would prefer to enter early below 29.50 as a 2 point drop to 28.45 may skew the risk reward a bit too much for our liking.
CORR, COR Therapeutics, Inc., Short < 27.80, Biotech Sector, $BTK.X
Head and shoulders on the daily. Below the key support at 27.80, predicted drop is to 21.50 if head and shoulders pattern follows through.
CRA, Celera Genomics, Short < 37.35, Biotech Sector, $BTK.X
CRA has already lost key support with minor support at 37.35.
CEPH, Cephalon, Short < 65.40, Biotech Sector, $BTK.X
Below 65.40, the next support on this stock isn't until 64.30 (200 m/a on 60 min chart). Below this point, it could get ugly until 61.00.
HGSI, Human Genome Sicences, Short < 61.00, Biotech Sector, $BTK.X
Below yesterday's low, this stock is in big trouble.
IMCL, Imclone, Short < 45.64, Biotech Sector, $BTK.X
Below 45.64, next support near 44.00 then nothing until 40.50.
IBM, International Business Machines, Short < 114.56, Computer Hardware, $HWI.X
Below 114.56, IBM will have breached the 20, 40, and 200 ma's on the 5 min, 15 min and 60 min charts. Next support at 113.31 and then 112.00.
PVN, Providian Financial, Short < 51.25, Banking Sector, $BKX.X
This stock attempted to rally above its 200 MA on the daily on Tuesday, but failed to hold there and ended up closing below it. During the past several days, it has attempted to break though but has been unable to do so. On a break below the past few days’ support of 51.40, the selling is likely to accelerate.
MMM, Minnesota Mining and Mfgr., Short < 120, Chemical Sector, $CEX.X
Below 120 the next stop is 119, and then 115.85 on the daily chart.
Deron, Steve, and Ed
General Partners
intradayinvestments.com |
