Sun
Microsystems (NASDAQ: SUNW)
Market Call™ for January 18, 2001
Contributed by Mark Seleznov, TrendTrader.com.
The purpose of this Market Call section is to
educate readers in technical analysis patterns and indicators. As with all investment
information, you need to research information and consult your financial advisor before
initiating any strategies that are contained in Market Call.
Also, you must realize that as with all trading strategies,
opinions can change quickly depending on market conditions and developments.
This column tries to present historical examples, potential set
ups, and examples of entry and exit strategies.
Think of security prices as a war. It is a battle between a bull (the
buyer) and a bear (the seller). The bulls push prices higher and the bears
push prices lower. A buyer that feels an area has good value will buy at
that level. The seller that feels that a stock has reached fair value will
sell at that higher fair value price. The direction prices move reveal who
has won the battle.
Support levels are the price where the majority of traders feel the value is
a good buy.
Resistance is the level in which the majority of traders feel prices will
move lower.
When the majority of traders and investors change their expectations, these
support and resistance areas get violated and a new trend may be beginning.
This can occur due to changes in expectation of earnings, new product
development, change of personnel, cut backs or expansions.
Let's take a look at Sun Microsystems,
Inc. (SUNW)
In the latter part of Tuesday, SUNW’s 5 period moving average had crossed
over its 20 period moving average and started to gap away from it. This
indicated strength toward the end of the day and a buy signal. It gapped
from a close of $31 3/8 on Tuesday to $32 7/8 on Wednesday morning. This
strength began to whither away when SUNW traded up to prior resistance at
about $33 � and that resistance level held. You can see this prior
resistance looking back on the chart to Jan. 4th where SUNW traded up to $33
5/8 and then began its rapid descent.
If holding a position on SUNW, I would put in a sell on the position and
wait for it to break through that $33 5/8 resistance to re-enter into the
position. The rolling over of the MACD and the 20 period moving average
confirms this sell signal. If the stock should trade strong into the open on
Thursday, consider selling into this resistance, and if necessary, re-enter
when SUNW breaks through $34.
A buy on SUNW may also be considered if it falls to its prior support level
at about $30 with a tight stop at about $29 11/16.
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Call Information
Mark A. Seleznov is a General
Securities Principal and Managing Partner of Trend Trader, LLC, a NASD, SIPC broker/dealer firm located in
Scottsdale, Arizona. A professional trader for over 25 years, Mark was a Market Maker on
the Philadelphia Stock Exchange, a Retail Registered Representative, and futures trader.
Mark is an author and recognized expert in equity Day Trading. He conducts seminars in
Equity Day Trading and offers his firm traders training and support. If his firm holds any
positions in the public companies he writes about, it will be noted at the bottom of his
article.
Market Calls is a daily syndicated column on trading by Mark A. Seleznov, Managing Partner
of Trend Trader,
LLC. For information on obtaining Market Calls for your web site,
newspapers, or publication, contact Trend Trader, LLC at 602-948-1146
Disclaimer: Trading in securities may not be suitable for
all individuals. Consult your broker or other professional to determine your suitability.
This is not an offer to buy or sell securities. The advice given above is of a general
nature and should not be taken as a recommendation to buy or sell the referenced security.
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1998-2000 Tulips and Bears LLC.
All Rights Reserved. Republication of this material,
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is strictly prohibited.
Last modified: January 18, 2001
Published By Tulips and Bears
LLC
