Something New
Today’s Insight
How have your returns been lately? Last week
seemed like a rough week for a lot of daytraders, due to the level of, what I’ll
refer to as “jigginess” in the markets. It seems that the first hour
is one of the most difficult to trade.
If you’ve been having trouble in the first hour,
why don’t we set out a plan to beat this problem? For me, I’ve historically been
quite profitable in the first hour, but why don’t we see what would happen if we
didn’t trade in the first hour. I’ll play along too and we’ll see what happens.
Let’s focus on the market after the first hour.
See if it seems to settle down more. In my experience, the first hour provides
ample times for stocks to trace out some patterns on the intraday charts.Â
Why not keep a special list of your trades this
week that take place after the first hour? Don’t count those stocks which you
sold from holding over from the previous day.
If you’d like, you can send me a list of results.
I might not be able to respond to every letter and I won’t be able to offer any
advice regarding specific trades, but I would be interested to see the results.
Today’s Watchlist:
(
SUNW |
Quote |
Chart |
News |
PowerRating),
(
PAYX |
Quote |
Chart |
News |
PowerRating),
(
DELL |
Quote |
Chart |
News |
PowerRating),
(
GLW |
Quote |
Chart |
News |
PowerRating)
We need to take another quick look at Sun
Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating) because it looks like it’s trying to break out. I’m
going to set my alerts at 110 1/4. That doesn’t mean that I’m just going to jump
in, it simply means that it’s a level that I would like to see it break. Ideally,
the stock will close at a new high during a breakout and then put in a
continuation day. We’ll see what happens.
Paychex
(
PAYX |
Quote |
Chart |
News |
PowerRating) has
broken out to a new high intraday on Monday. Ha! Who was it who said that there
are no long opportunities in a weak market?Â
The volume today is light,
but the day is not over. Watch for a new closing high on Monday followed by a
continuation day on Tuesday. If it doesn’t close at a new high today, then the
play will be invalidated and we’ll have to wait yet another day. The two-week
consolidation near the highs is a positive sign as well.Â
Dell
(
DELL |
Quote |
Chart |
News |
PowerRating) is the perfect example of one of those patterns
where people will ask me, “How do you know if its a bearish flag or not?” My
response is simple: “I know after the fact.” No one can tell if a
pattern like this one is a sign of a bottom or a pause on the way down.
The solution is equally simple: Let price action be your guide.
If the stock breaks down and leaves this short-term uptrending channel, then
I’ll look for short opportunities. Set your alerts below Friday’s intraday low
as we watch to see where the price takes us. Should it break down, watch for
support to appear near the recent lows. The most conservative way to play the
pattern is to wait for it to actually take out its lows.
Corning
(
GLW |
Quote |
Chart |
News |
PowerRating) has
quickly returned to its highs. It found support at the gap area from early
June. At this point we’ll watch for a move above 286 to provide a potential long
opportunity. With this type of high-level cup pattern, we want to see a rally
out of the cup on strong volume. I may also consider this to be more of a move
out of a bigger-picture consolidation pattern. It’s hard to imagine, but even a
40 point trading range can be a consolidation. Corning is regarded as a market
leader by many, so when they come for the big boys, they may come for Corning.
Ciao,Â
Â