And The Winner Is…
With each passing day, the suspense grows.
Who will win this battle, the bulls or the bears? It seems that each day one of
the two camps claims a “minor” victory, however, neither camp seems to
be able to pull off the resounding upset. So today we will again be witness to
the continuing battle. The upside is that eventually a winner will be declared
and the market will loosen up from a trading standpoint.
Nonetheless, there are trades to be had each day. The tricky part is that you
have to modify your approach each day in order to capitalize. One day the
standard HVT setups are working, the next
day you are better off focusing on setups off five-,15- and 60-minute charts,
and for Wednesday, you were better off capitalizing on news-related stocks like Texas
Utilities
(
TXU |
Quote |
Chart |
News |
PowerRating) and JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating).
Additionally, “cherry picking” your trades is imperative. If the trade
is marginal, do not get lured in or tempted by a setup that is not there. The
market can be very seductive, especially when it is quiet, and traders grow more
anxious for their “fix.”
The numbers are in for the jobless claims and it appears that it WILL NOT be
the catalyst we need to shake up the market. While I learned early on to never
make bold predictions simply because there is no way to know exactly what will
happen, as a trader you always need to have some hunches in order to be prepared
if that scenario plays out. The difficult part with my hunch right now is that
it puts me in direct contrast with the market, and while I never try to buck the
trend, if you are aware that there may be a trend change, you are better
prepared to trade it when and if it occurs.
While it is not really a hunch, there are some technical reasons behind this,
as well as the current sentiment being uttered on the financial channels.
(Remember, they always have those guests who are always wrong, yet keep getting
invited back, see Gary
K’s article.) Most of them now are talking about how bad the market is, it
will not go up until “this and that change.” The point is that you get
a rally when everyone is beginning to throw in the towel. Â
I am not proclaiming the beginning of some glorious new bull market. I still
believe that there is a lot more downside in this market, but bear market
rallies can be vicious and provide very large percentage moves in a very short
period of time. Go back and look at your charts from late July and early August.
The snapback rally was large from a percentage standpoint. Now, that did occur
after a capitulation, something we do not have currently. Â
To clarify, I am not loading up my order entry system with buy orders this
morning, but I am keeping an eye on the tone of the market. I will update
you in tomorrow’s column with some specific charts that I am looking at which
show how I am arriving at these conclusions. In the meantime, be selective. This
choppy market is a real test.
| Intraday Setups |
|
|
|
|
| Stock | Action |
| AZN | Short |
| ADVP | Short |
| CERN | Short |
| OMC | Short |
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 806 | *832* |
| *798* | 825 |
| 790 | 819 |
| 785 | 816 |
| *775* | 812.50 |
| 766 | 804.75 |
| 750 | 796.75 |
| 792 | |
| *781* |
* indicates a level that is more significant.
As always, feel free to send me your comments and
questions. See you in TradersWire.