Transition
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.
Heads up! After the close, IBM and Advanced Micro Devices
both announce better-than-expected earnings. Both stocks are up sharply in after
hours trading. Further, there was a plethora of positive news from other
companies after the close (Dell, Apple, etc.) This action will likely push tech
higher early on Thursday.
On
Wednesday, the Nasdaq gapped higher on the Intel news and after a brief pullback continued higher. Then, on some news (anyone catch what
happened?), it shot up about 100 points and kept a bullish bias until late afternoon. It
then drifted lower, giving back about a quarter of the day’s gains. However, even
with this selling into the close, it still made history as the biggest one-day
percentage gain ever.
Wednesday’s
action has it peeping above and closing right at the 50-day moving average.
The S&P also put in an
impressive performance–closing well above it’s 50.
If we can stabilize in here,
and have a minimal pullback, then we can start nibbling again on the long side.
As mentioned recently, transition patterns, such as Bow Ties, will be your best
bet to find and play these first pullbacks. It’s way too early to tell if this
is just another bear market rally or the beginning of a new bull leg. However,
if we take it day-by-day and setup-by-setup, and don’t bet the farm, it
shouldn’t matter what we call it.
So what do we do? After a melt-up like Wednesday, one would
expect a market to give up some of its gains. However, based on the after-hours
news, we could see another pop on Thursday’s open. This will make an overbought
market even more overbought. And will create a damned if you do and damned if
you don’t environment–if you try to short, the rally will continue, if you go
long, then it’ll correct. Therefore, keep it light and let the situation evolve.
If this is the real deal we will have plenty of setups along the way.
As you know, I’m more of a pullback player than a breakout
player. With that said, I was unable to find any meaningful setups tonight.
Other
Just a few days left to sign up
for Tony
Saliba’s Options Seminar. I hope see you there!
Best
of luck with your trading on Thursday!
P.S. Reminder:
Protective stops on every trade!
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concise and clear words have helped me climb up the learning curve of trading faster
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