Momentum Trader Report: 05/27/08

The market bounced today as expected. Although not a tremendous bounce, it was encouraging to see.

One of the reasons a bounce was expected was because the Nasdaq and S&P 500 were sitting at major support levels. As mentioned in last nights post, the Nasdaq was sitting at a trendline and could bounce. It closed up +1.5% today.

If the Nasdaq runs into resistance at 2500, or at the 200 SMA, it could form a bearish head and shoulders pattern.

Notice that QID, an ETF which trades twice the inverse of the Nasdaq, could be forming a bullish inverse head and shoulders pattern. Just one way to profit if the Nasdaq does reverse. That doesn’t necessarily mean it will, but something to watch.

There were two triggers from the Watchlist today. The first one did very well, it was FLS. It blasted through the entry point early in the day and closed at the high of the day. Todays action showed that it could move higher from here.

The other was CLR. It did move nicely intraday, but retraced to close below the entry point, although it still looks technically good.

Today’s bounce was on light volume, but was encouraging nonetheless. We are now at the end of the month when stocks typically do well, so perhaps this bounce could continue.

Trade Ideas for 05/28/08:

Good luck and good trading!