A Slow Start, But…
While the morning started off rather slowly,
i.e., gap and crap, there were some subtle signs pointing to the mid-day break
above 900, mainly the SOX and the Nasdaq.
Take a look at the charts below. These charts were created in advance of the
trade, NOT after the fact, and helped guide me into the trade. The frequency of
my trades is down, but if you are patient and selective, the moves can be
good. In this instance, given that the Nasdaq and SOX were leading the market, a
position in the chip stocks, the SMHs or a
Nasdaq E-Mini contract would have provided a
great vehicle.
So, regardless of your opinion of the overall market, let the charts be your
guide.
I did a handful of other such trades yesterday. The quick volatility spikes
were nowhere to be seen, resulting in few, if any HVT
setups.
One other note. As you probably are aware already, not only is the market
paying very close attention to technical levels, it appears that at each
minor/major support/resistance level there are decent-sized bids and
offers. This has been playing out for several weeks now, and I cannot venture a
guess as to when it will end. The comments in Kevin Haggerty’s article yesterday
speak volumes in my opinion:
"I suggest you review the charts from 1965 to 1982
and relate it to the trading strategies you currently use."
If you have any perspective on market history, trading
ranges are a fact, although not in recent memory. How will you trade a range? I
can tell you one thing, it will not be exactly the same way you trade a trending
market. Fine-tuning your approach without abandoning the core principals may be
a requirement going forward
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 922-25 | 1091 |
| *916* | 1077 |
| 909 | 1072 |
| 905 | 1059 |
| 902 | 1054 |
| 897 | 1041 |
| 892 | 1029.50 |
| 886-87 | 1013.50 |
* indicates a level that is more significant.
As always, feel free to send me your comments and
questions. See you in TradersWire.