This Market Has Become Crazy
Each evening we focus on the most interesting aspects for the upcoming trading day. The comments are based on observations of the nightly updates of the Stocks/Sectors and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
At the time this is being published, the S&P Globex Futures are trading .50 points lower and the Bond Market Futures are trading down 3 ticks.
Heads up, the Employment Report is scheduled for release tomorrow morning. This will likely cause extreme volatility in both the stock and bond markets in early trading.
A friend of a friend was bragging today about how “accurate†his trading has been lately. In these crazy markets, he’s been buying the latest go-go names and selling them for 2-3 point profits. So what’s the problem you might ask? The problem is that he’s been taking 10 points heat (or more) on many of these stocks and waiting until they “come backâ€. I can assure you that his new found career as a trader won’t last much longer. My “PS†at the bottom of this Outlook every night is there for a reason. Heed my warning.
Tonight, I had difficulty finding possible setups on the long side as many stocks are way over extended. Be careful in this environment and avoid chasing these stocks higher (see this morning’s comments from Jeff Cooper for an example of how crazy this market has become). In my opinion, you might be better off waiting for the next pullback.
4 Kids Entertainment [KIDE>KIDE], on the Pullbacks List, looks like it might have one last rally left in it. Just wait for it to re-assert itself (i.e. take out the prior 1-3 bar highs) and use caution as this one is crazy.
For you breakout players Brocade Communications [BRCD>BRCD], mentioned over the past 2 nights, rallied out of a pullback/TKO/TPP (see archives for a detailed explanation) to close at an all time high today. Knight/Trimark [NITE>NITE], on the Above 50-DEMA-DV List, appears to be rallying off of a rounded bottom formation.
I2 Technologies [ITWO>ITWO], mentioned last night, still looks interesting to me.
On the short side, Visx Inc. [VISX>VISX], on the Implosion 10 Technology List, closed poorly today and looks poised to challenge its old lows (around 57).
Best of luck with your trading on Friday!
Dave Landry
PS – Reminder: Protective stops on every trade!