Earnings season ramps up this week, and investors are watching the market closely as a result. That’s why now’s an especially important time to keep an eye on the stocks that are already set up for a trade. And right now, tech stocks are worth watching. Here’s what you need to watch in the tech sector to make a play in the coming week…

From a daily perspective, the markets are stretched right now. We are at trend channel resistance in virtually all the indexes. That means that the risk of a pullback to trend channel support is a very real possibility.

The name of the game on the long side from here is to “Let Them Come To You” in the form of a pullback off trend channel resistance highs back down to trend channel support.

It’s time to sit and wait, then we can start to pick off the best-positioned technical setups.

What Do I Need to See to Make Me Take a Trade?

Google gapped up on Friday, after an earnings release that impressed analysts and investors alike. That move in Wall Street’s favorite tech stock spurred the entire industry upward with the hope that tech profits would be solid across the board.

It’s interesting to note, however, that the “Google of China” – Bidu.com (NASDAQ: BIDU) — didnt participate on Friday with the rest of tech. That bothers me, and it should bother you too…

VMWare (NYSE: VMW) is a perfect example of trendline channel resistance. With shares currently trading right at that upper green bound, the technicals are telling us that this stock is unlikely to make it past the $47 mark right now. More importantly, this chart lets us know that a pullback to the lower green line is good time to go long on this virtualization solution company.

Apple announced earnings yesterday, but Apple announced its third quarter earnings yesterday – a completely irrelevant event for technical traders. With the company’s share prices sitting at trend channel resistance , we could care less about AAPL’s earnings as the overall technicals trump the news-driven event.

As you can see for the most part all the leading stocks out there are nowhere near low risk  entry points. This ought to tell you something about the overall market.

What to Watch for from Here

With what’s going on right now, the game plan is wait for trend channel support to buy, and sell trend channel resistance. And with  the bulk of what we see at trend channel resistance right now, we’re stuck in a waiting game of sorts until the market corrects itself.

When these issues above come down to trend channel support, we’ll start talking about going long.

Sincerely,
David Grandey
AllAboutTrends.net

October 20, 2009

David Grandey

David Grandey is the founder of All About Trends, an email newsletter service revealing stocks in ideal set-ups offering potential significant short-term gains.  A successful canslim-based stock market investor for the past 10 years, he has worked for Meriwest Credit Union Silicon Valley Bank, helping to establish brand awareness and credibility through feature editorial coverage in leading national and local news media.

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