When It Rains…
The gap up this morning was quickly filled as the Nasdaq went
negative. On the other hand, the DJ Industrials were not so lucky.Â
The new complication of the day is the pending war in the Middle
East. This is having a sharp effect on oil prices, which spiked following
the news. With the potential for higher prices, who is going to want to go home
short over the weekend? Top it all off with a couple more earnings warnings, I
think that pessimism may pervade the market over the near-term.Â
The one positive thing here is that volume has picked up in the
Nasdaq.Â
But the worst part of the situation, in market terms, is that
stocks and futures are moving in a choppy fashion, shaking out a lot of players
during intraday moves. We already know that the market tends to reverse within
the first 30 minutes of trading, but what about numerous jagged multiple-point
swings on each five-minute bar? That can make trading quite rough, unless you
are a scalper.
As for all of the sentiment indicators, they are suggesting
heavy selling. The VIX is now over 33. We are also seeing heavy put buying in
many of the big names, which is also a contrarian indication.Â
Since there are few breakouts on the long side, traders may want
to focus on trading pullbacks.
The names that I mentioned this morning in the generic drug
group, DGX and BAX, are holding up quite well and, while the oil stocks are
running a bit, this part of the current move is news-driven, and could turn on
any press release. The strongest sectors intraday are oil, oil service,
natural gas, and drugs. The weakest sectors are retail, banking and the
brokerage sector.
In tech-land, the Nadsaq 60-minute chart shows another potential
breakdown. It may be time for another short move.
If you are fighting looking for signs of intraday short-term
bottoms, use a combination of extreme readings on the TICK and TRIN. Personally,
I hate to fight the trend.Â
You’ll find me in the futures market for the rest of the day.
Here’s a chart of what I am watching right now.
My best advice for today is, if you are having trouble trading,
take an early day off, and get ready for Las Vegas. Come on seven!
Until later,Â