Like A Fiddler On The Roof
Traditionally, this is a good day. Of course, this is the year
that many traditions have been broken.
Summer Rally? No. Labor Day rally? No. Weak October? Yes. Pre-Thanksgiving
Rally? No. Post-Thanksgiving rally? So far, but the day is not
over.
The one tradition that did hold is that IBM
(
IBM |
Quote |
Chart |
News |
PowerRating) is
trading higher on the Friday after Thanksgiving. This has occurred
since I have been trading.
I know that many of you are not trading today. Because of the light volume, the moves in stocks have been both
limited and exaggerated. Does that not sound like something a
politician would say?
What I mean is that some stocks have had fewer bids and
offers, so they are skipping through prices where there would
normally be trades. On the other hand, stocks like Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating)
have not seen those 70,000 share bids which push the stock up 1
point in three minutes.
For the rest of the day, look for some type of major trend
move. While we cannot predict if there will be a rally or a
selloff, from experience, we know that the market has been
selling off at the end of the majority of trading days in the
last month. Look at a five-minute chart of the big tech names on
Wednesday, and note just how much profit was taken out of the
stocks in the last 10 minutes of trading. If you are daytrading
and have a profit, keep your focus and do not be tricked into
holding over by a small Nasdaq rally.
All of my charts tell me that there is still more downside
ahead. It is likely that there will be more selling, or, at the
least, still, no buying. My current strategy is take advantage of
short-term bounces in the big names. As many of you know, I do
not like to play the short side, but lately, I have been, because
of the great potential.
What I have noticed is that the current trend is for stocks to
trade in channels. This means that buying the highs and shorting
the lows on an intraday basis is dangerous, because stocks are
bouncing at these levels. Instead, buying pullbacks from highs
and selling pullbacks from lows seems to be the most efficient
strategy.
Have a good weekend.
A bientot,
David Baker