Here’s What I Do When The Trades Aren’t Coming
While the longer-term view of the markets took a
turn for the worse last week, the intraday trading remains, shall we
say, the same, a bit quiet. A slow bleed was the way I heard it described
best. Other than a few setups on the openings, it is best to wait patiently or
play on a slightly longer time frame.
Many readers have asked me more specifically what I am doing, perhaps my
morning articles were just giving an overview, and not able to get into the
details of other trades and ideas. I am sad to report that there are no top
secret trades taken place here in my office in San Diego. I cannot remember a
time (other the most summers) when surfing the Internet and goofing off were a
more productive use of one’s time. In some ways it is not bad. It allows you to
take a rest and rest gives way to perspective. Naturally, the Iraq
situation is the big killer currently, but it certainly appears as though the US
is past the point of no return, so regardless of the outcome, the markets will
have an answer shortly. In the meantime, keep your powder dry, play the opening,
then hold on to your gains until the following day.
Sure, I know this has been the general theme for several columns now, but
what can I say? This is the hand that the market is dealing us currently. I
suspect that very soon there may not be enough time to pick your head up for
fear of missing a trade. Like a coiled spring, the market will come to life. I
am hopeful of some of that juicy price action similar to July of 2002. If we get
something similar, make absolutely sure you belly up to the bar, as it will only
be open for a short time. Many traders associate more risk to those extreme
periods of volatility, but I believe it is just the opposite. The market
currently represents far more risk intraday simply due to their choppy
nature. Go back and study the intraday charts in July, both of the S&Ps and some
of the big trading stocks. Once a move up or down was commenced, it fed on
itself for sometimes 7-12 S&P points. Assuming you identify the turning points
reasonably well, the follow through was great.
So while it is slow, go back and review those charts. If we get similar price
action in the days and weeks to come, you will have gained a solid perspective
on how those markets function. Traders who have been around for a few of these
periods know that a whole year can be made in that time. Given how slow it has
been this year, I will be happy to cram the remaining 46 weeks or so into a
month and then take a long vacation.
Technically, the bigger picture got a lot more ominous last week. Back on
Jan. 16, I had been looking for a "turning point" in the market based on
Fibonacci time extensions. The end of that week (1/17/03) had the Nasdaq and
S&Ps putting in an outside down week. Last week, we got two more indices to join
the party, the NYSE and Dow Jones Composite. While this does not mean we go
straight down from here, it does add further momentum to the downside.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 859 | *1020* |
| 854 | 996 |
| 847 | *985* |
| 839-40 | 972 |
| 830 | 968 |
| 820 | 954 |
| 814-15 | *933* |
| 808 | |
| 804 | |
| 796 |
As always, feel free to send me your comments and
questions.