Trading Experience
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 3.70 points higher and the bond market is trading up 3 ticks.
Heads up, after the close Internet incubator CMG Inc. [CMGI>CMGI] announced better-than-expected earnings. The stock is up nearly 30 points in early Instinet trading. This will likely carry the internet stocks higher tomorrow.
Who wants to be a money manager? A good friend of mine has a grand total of 7 weeks “trading†experience. I use the word trading loosely as in reality, his experience is based on entering a trading contest and “trading†his fictitious $100,000 account during that time. His “resultsâ€, trading hot 4 letter stocks, are not bad. In fact, his friends and family members are so impressed that they plan to invest (real money) with him. Now don’t get me wrong, I wish him a long and prosperous career as money manager. My point is, this guy has never seen a bear market, in fact, he’s only seen a few down days on the NASDAQ during his “careerâ€. This is not reality. Enjoy this continued run-up but don’t get caught up in the hype of recent markets. Keep in mind that it takes experience in a wide variety of markets in order to become proficient at trading . It can be done but it does take a little longer than 7 weeks.
And now for something completely different. The great thing about having the computer do all the work is that occasionally the indicator lists provide useful information in addition to potential set-ups. Notice tonight that there are many cyclicals on the Proprietary Momentum and New 60-Day Highs on Double Volume Lists. This include (but are not limited to) Eastman Chemical [EMN>EMN], Alcoa [AA>AA], Reynolds Metals [RLM>RLM], International Paper [IP>IP] and Georgia Pacific [GP>GP]. Now I don’t think it’s time to dump all your techs and run out and buy cyclicals but you can’t ignore the fact that the database is talking.
Cambridge Technology [CATP>CATP], mentioned last night, still looks like it has the potential to resume its fast break higher.
On the Pullbacks List, Autodesk [ADSK>ADSK], mentioned recently and in the strong Software Sector [$CWX.X>$CWX.X] closed well today and looks poised to continue its uptrend. Bea Systems [BEAS>BEAS], mentioned last night (see archive for details) still looks like it has the potential to resume its parabolic trend upwards. Just wait for it to prove itself by taking out the prior 2-3 bar highs.
TicketMaster Online [TMCS>TMCS], on the Proprietary Momentum List, is a Trend Knock Out (TKO) that looks interesting to me (note: I won’t bore you with an explanation of the pattern, see recent archives).
Chemdex [CMDX>CMDX], on the Trading Where The Action Is List, is another TKO that looks like it has potential.
BTW, thanks for the emails. Keep them coming! Although I can’t always reply to them all, I do read each and every one.
Best of luck with your trading on Thursday!
PS – Reminder: Protective stops on every trade!