Stalk Sheet for Friday, July 7, 2001
It was nice being short yesterday and even better after the close. AMD warned after the close on Thursday sending stocks plummeting. It was nice seeing a sustained trend in the market!
We have to be careful not to enter any set ups that gap more than ½ to 1 point beyond their entry target. If the market gaps down severely in the morning, we will consider fading the gap. This is particularly true of stocks that showed strength into the close on Thursday that were not affected by news (i.e. Earnings warnings or sympathy plays).
Several Stocks in the Telco Hardware Sector seem set up well for the fade on a gap down. But, only the circumstances tomorrow morning can provide us with the information we need to decide with certainty.
Given the nice gains we have seen over the past two trading days, it is even possible that we may limit are trading to taking profits at the open. We must be on guard for a reversal.
p.s. (the more we research tonight, the more we smell a reversal. We tried to find some good semiconductor shorts but with the big post market gap down, the risk reward just doesn’t seem to be in our favor)
Longs:
JDSU, JDS Uniphase, Long on gap down > 10.97, Telco Hardware, $XTC.X
This is a major Fibo support zone. Gap down must be on light volume and market must show signs of reversal. This is definitely NOT a mechanical trade. The circumstance must warrant an entry.
LU, Lucent Technologies, Long on gap down >= 6.10, Telco Hardware, $XTC.X
Again, must be light volume gap down. Follow same rules posted for JDSU.
SGP, Schering-Plough, Long > 36.70, Drug Sector, $DRG.X
At this price, major resistance is broken on 5, 15 and 60 min timeframes. Sector consolidating after multi week sell off.
LLY, Eli Lilly, Long > 76.65, Drug Sector, $DRG.X
Will look to enter at 76.65 with 76.90 being the last thread of resistance. Above here, the stock breaks the neckline of an inverse head and shoulders formed on the 60 min chart.
JNJ, Johnson & Johnson, Long > 51.55, Drug Sector, $DRG.X
This stock closed strong, on increasing volume, on a difficult day in the market. Will need good volume to break out. Above 51.55 all major moving averages we follow on 5, 15, 60 and daily timeframes will be penetrated.
* Also, watch stocks in the Oil Services Sector for long plays.
Shorts:
PROX, Proxim, Short < 13.00, Wireless-Lan, $XTC.X
Key support area at 13.00. Below here could see 12.75 then 12.30.
PCS, Sprint PCS, Short < 23.82, Wireless-Cellular, $XTC.X
Key Fibo support here. At this price the stock would also break its trend line and break below the rising 40 period m/a on the 60 min chart.
A, Agilent, Short <31.80, Computer Hardware, $HWI.X
Below 31.80, Agilent loses all major moving average support on the 5min, 15 min, 60 min and daily charts. Next stop would be minor support at Thursday’s low of 31.50 with an ultimate target of 30.55.
CMVT, Comverse Technology, Short < 51.95, Telco Hardware, $XTC.X
Will need to be selling off on strong volume and doing so convincingly since 51.95 is a major support zone. Also, RSI is diverging from the price of the stock so we must be careful.
MOT, Motorola, Short < 15.80, Telco Hardware, $XTC.X
Below 15.80 we should see 15.00 since we have broken the up trend line and are below all major moving averages on all timeframes that we follow. Also, MOT closed near the low of the day after a multi day rally and did so on increasing volume. Will find some support at 15.60.
LGTO, Legato Systems, Short < 14.90, Software Sector, $GSO.X
Below 15.90 this stock loses Fibo support and 200 m/a on the 60 min chart.
INTU, Intuit, Short <36.60, Software Sector, $GSO.X
Below here constitutes a minor trend line break and penetration of the rising 20 m/a on the daily (a.k.a. Fibonacci Support). Next support would be 35.80 then 35.00.
CREE, Cree Inc., Short < 20.55, Semiconductor Equipment, $SOX.X
Below 20.55 this stock could see the lows of the year.
RMBS, Rambus, Short <10.35, Semiconductor Sector, $SOX.X
Below 10.35 the head and shoulders pattern on the 60 min chart could follow through to 9.00.
Trade Well Today!
Ed, Steve & Deron,
General Partners
intradayinvestments.com |
