A Confident Swing Trade
Opposing
signals from TradingMarkets.com’s proprietary indicators page gave
traders a strong clue before the market opened about the down-up action — and
good swing trade — we’ve seen in the S&P 500 index this morning in response
to the Conference Board’s "surprisingly" weak consumer confidence
number.
If you had looked at the Futures
Indicators Page, the place to check for momentum, reversals, and pullback
signals in the tradable instruments for the major major gauges, you would have
found the December S&P futures
(
SPZ1 |
Quote |
Chart |
News |
PowerRating) sporting both a
Turtle Soup Plus One
Sell signal and a Momentum-5
List reading.
The conflicting indications were your
signal that there could be a sell off if the futures traded below their trigger
at 1154.50 (the previous 20-day high on Nov. 19). The Momentum-5 reading implied
the upside inertia in the S&P 500 index could resume. Catching the pullback
came at the 1140.00 support level specified by Lewis Borsellino in his S&Ps
A.M. commentary this morning. This level also coincided with the 61.8%
retracement of the rally from the 1131.00 swing low two days ago.
The S&P 500 cash, up 3.84 at
1161.21, and the Nasdaq Composite, up 21.91 at 1963.14, are rallying to new
multi-month highs. The Dow is down 17 at 9964 but has recovered from a
triple-digit negative start and is leaving a bullish tail at a multi-month high,
a constructive sign.
In addition to the surprise drop in
consumer confidence, the market was also pressured early by the call from
(
NOK |
Quote |
Chart |
News |
PowerRating),
the world’s largest maker of cellular phones, that demand for handsets will
fall. Nokia was down as much as 6% in early trading and
(
ERICY |
Quote |
Chart |
News |
PowerRating) was also
down as much as 6%.
But also making a difference in market
action in both the Nasdaq and in blue chips was the threat of competition to
software giant
(
MSFT |
Quote |
Chart |
News |
PowerRating).
Microsoft initially tumbled over $2 on
the announcement that Linux-open-operating-system provider
(
RHAT |
Quote |
Chart |
News |
PowerRating) would
enter a pact with
(
IBM |
Quote |
Chart |
News |
PowerRating) to provide "open source software solutions,
services and support for the entire IBM server product line." This renewed
the Street’s attention on Red Hat, which traded as high as $151 four months
after its IPO debut in August 2000. Although still in single digits, up 1.64 at
7.65, the stock gapped open to meet a new nine-month high on trade that is
already three times above normal.