Friday was another day that started out strong and ended in a wimper. Although, most stocks came off their lows, the fact that they gapped and then did nothing shows there is still ample supply. At this point, it still looks like most equities are under distribution and another down leg is in order. V bottoms are pretty rare, and I am sticking with the probabilities that the recent lows will at least be tested. Although the hourly charts look like there may still be some room to the upside, I am staying away from initiating new longs (other then daytrades) because the indices have already bounced a little higher and remain comfortably below their 50sma's. With that in mind, I am adding the following short setups to my watchlist.
Satyam Computer (ADR) (Public, NYSE:SAY)
SAY had a pretty strong bounce higher after a large gap down. It is headed right into resistance and looks to be running out of steam. I would imagine that some of the dip buyers will be taking easy profits if the markets resume the slide.
Chunghwa Telecom Co., Ltd. (ADR) (Public, NYSE:CHT)
CHT looks like it rolled over and is now getting a dead cat bounce. While it may continue to the 20sma, it looks like there is plenty of downside left here.
Best Buy Co., Inc. (Public, NYSE:BBY)
BBY is the classic stock under distribution play. It seems like there are ample institutions getting out of BBY as it continues to meet waves of selling on every retrace higher. It had a nice bounce back into resistance last week, and may be ready to resume the downtrend.
Good Luck,
Joey
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