Getting Ready For Summer
Good
morning. I wanted to leave you
with some thoughts as we head into the weekend, especially ahead of the
truncated holiday trading week. Despite
summer officially starting a week or so ago, the summer vacation season will
start in earnest this coming week. While
I don’t think that houses in the Hamptons will be renting for quite the rate
they were last year ($50,000 a month I had heard), you can bet that there will
be plenty of big Wall Street players spending a fair amount of time out there.
The point is, Wall Street gets pretty quiet during the summer.
It does not mean that trading ceases, it simply means the game is played
a bit differently.
In my eight years as a trader,
four of which as the managing partner of my own firm, I have yet to see a summer
where monthly net P&L for myself or any other trader matches the months
prior. The exception being August 1999
when we had the Japanese currency crisis. While
money is there to be made, it is made by the most patient and disciplined in the
office. Sticking to your rules is not
just a battle cry, it will determine whether or not you make any money.
Now I am not trying to cast a long dark shadow over the forthcoming
trading sessions. I will be the first person to invite some sort of a financial
or political crisis to get those markets going…provided no one gets
hurt…physically.
Let’s revisit a few rules as
they pertain to active intraday trading:
- The
trend is your friend. Don’t make trades that run counter to the trend on
the one-minute chart. Bottom fishing
and short-selling tops, while a viable strategy, reduces your odds of
success dramatically in quiet, illiquid markets. - The
morning session will offer you the best trading for the day, so capitalize
while the volume is there. - If
trading is light or directionless, walk away or do some chart work so you
are prepared when the markets do loosen up. - Don’t
buy or sell-short extended moves. Let
the market come to you. - Take
some time off if you haven’t done so in a while.
The best traders have interests outside the market.
I believe the market will offer
some good opportunities this morning after digesting the Microsoft
(
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news.yes”> This should offer some good entry and exit points.
The market will certainly be tested as it goes forward. Now that the Fed
is out of the way until August, it will be very interesting to see if this
market has got some legs to it. Expect
trading to taper off in the afternoon.
Currently, the S&Ps are up
to 1233, just a shade above support at 1232, while 1221 still lurks as key
support and will be pivotal on whether or not the current upward trend
continues.The Nasdaq is also trading
higher, just above the 1824 support level, but well above its’ 50% retracement
level, which proved to be elusive for many sessions.
A push through 1846 would be very bullish.
Price action may be a bit odd
in the afternoon as portfolio managers do the end-of-quarter window dressing.Some stocks that are setting up
on a slightly longer-term basis, based on 15-minute and daily charts are:
Genzyme
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On balance, volume making new highs ahead of new price high as well as a
potential turn in the oscillator on a 15-minute chart.
Commerce One
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This is a play on the "how much cheaper can it get" concept,
but also based on some solid technical patterns.
It is indicated to open up .95, breaking it above its 21-day moving
average and breaking it above resistance on the 15-minute chart.
Until Monday, enjoy your
weekend.
Dave