Redback
Networks Inc (NASDAQ: RBAK)
Market Call™ for February 6, 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.
Regardless of the direction of the general market, some stocks will move in
the other direction.
If a stock is strong in a weak market, it can become a leader in an up
market.
This may be the case for RBAK since it was up today in a down market.
Fibonacci and Support and
Resistance
One interesting pattern that traders see after a breakout, is that the stock
or index retraces a part of the initial move by about 50%.
Fibonacci lines use this same concept, but also incorporate additional
retracement levels of 38.2 % and 61.8 %.
Now let’s look at
RBAK.
RBAK initially started a move from $29 on 01/08/01 to $56 on 01/17/01. The
stock then retraced back down almost exactly to the 61.8% retracement (TORS
users can right click on their chart and select “trend tools” to draw
Fibonacci lines). Since, the stock has found good support around this $39 �
area and on 01/26/01 began a new move to re-test the $56 level. Although
the stock barely made it back to $51, the retracement never tested the old
support levels and was followed today with a gap up in a down market.
RBAK had a high of $45 today. I would buy the stock at 44 � and risk to 43
3/4. A lower risk trade can be taken at around $43 should the stock
retrace; but be careful since the stock should not fall below $42 5/16
without going back to test the $40 level.
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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.
Copyright �
1998-2000 Tulips and Bears LLC.
All Rights Reserved. Republication of this material,
including posting to message boards or news groups,
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is strictly prohibited.
Last modified: February 06, 2001
Published By Tulips and Bears
LLC
