A Strong Recipe

  • October 29, 2002
  • Don Miller

Mix much
worse-than-expected consumer-confidence figures
with early 3- and 13-minute downtrends and a
60-minute bearish price probe, and you have a strong recipe for an elevator drop
to test critical longer-term lows on both the S&P and Nasdaq markets. Such was
the case this morning, as our chart backdrops provided the wood and consumer
surveys the oxygen for a burning of the long-standing 905-875 ES and 960-1000 NQ
ranges.

Given the range break, long stops and fresh shorts have been in full force thus
far, especially in the weaker tech market (down 4%) as NQ has just hit lock
limit down at -40 as we go to press.  As we head into the afternoon, the
13-minute 15MA can serve as a strong trailing stop premise for any remaining
short positions (school
students should have been paring into the extremes) keeping in mind we’re
also approaching a test of daily uptrend support in the larger scheme of things.

ES (S&P)         
Tuesday October 29, 2002  11:30 A.M. ET            NQ
(Nasdaq)


Moving Avg Legend:
5MA
15MA 60-Min 15MA

See
School and

Video for Setups and Methodologies

Charts ©
2002 Quote LLC

The theme of the last few days as
reflected in recent columns has purposely been one of caution, a theme that I’m
more than comfortable writing about for as long as the market dictates. For even
as short-term traders have had decent daily opportunity on one- and 3-minute
charts, the probability was high that the rangebound nature of the
larger-timeframe backdrops would limit larger gains on the lesser timeframe
trades, along with minimizing the number of stellar setups for those trading the
larger timeframes until the range was resolved. Such is the beauty of watching
multiple timeframes and not becoming overly focused on just one or two.

Despite the nonstop industry babble on the tube and in some trading rooms —
both the physical and virtual kind — that often leads unseasoned traders to
believe that the market is a casino where trading must begin at 9:30am ET or pay
a cover charge, keep in mind that watching and not doing anything for extended
periods of time is not only a necessary component of this business, but the
only
trading business perspective that will put money in your own pockets over the
long run vs. those of your broker or someone else.

Good Trading!


Don Miller

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