A Wrestling Match
The
bottom has been put in in the fiber-optic market…that is if you
believe the opposite of everything CNBC says. After
yesterday’s blow to stocks like Corning
(
GLW |
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PowerRating), Ciena
(
CIEN |
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PowerRating), etc., the
anchors at CNBC promptly gathered four analysts to announce that the market may
indeed go lower and they see no earnings for perhaps another 12-18 months.
If one looks back to when CNBC showed pictures of oil tankers lined up at
port with no place to dump it, you will know that that was the bottom of oil’s
precipitous slide. Again, I say this as a
casual observation and am not criticizing CNBC. It
will be interesting to see how it plays out.
Looking back to yesterday’s
session it was clear that buyers and sellers wrestled all day. The sellers
eventually won, but it provided a trading session that was not nearly as
“juicy†as it could have been. Limited
follow through in the futures (2-3 point intraday moves on a one-minute chart,
see chart below points A and B) as well as stocks provided only marginal profits
on a per-trade basis. For traders, it was
a good test at discipline and money management. If
a trader can pocket money as a “scalper†on a day like yesterday, they
should be able to flourish with better conditions, which I suspect will happen
this week.
Looking at today’s session,
we currently have the futures trading slightly lower, with the S&Ps trading
below the last visible support area at 1193 and the Nasdaq also below the last
visible support area at 1670. (Both of these numbers are also intraday pivot
numbers.) Yes, there will be intraday
support numbers, but these are the “big picture†numbers as seen on a daily
chart. The market seemed a bit
apprehensive yesterday about exploring lower territory, but I suspect that it is
only a matter of time before it cracks. This
is what I am waiting to see before I really attack my trades, a good dose of
panicked fear is at hand, and with it, it will produce fantastic intraday moves
in the futures as well as the underlying stocks.
On the opening, look for
support at 1178 and 1174, while the Nasdaq will see support at 1603 and 1585.
Resistance can be found at 1198.5 and 1686, respectively.
In terms of stocks that may
offer some good intraday setups off of support/resistance levels, look at these:
IBM
(
IBM |
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PowerRating):Â
resistance at 102.45
International Rectifier
(
IRF |
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PowerRating):(
EMC |
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News |
PowerRating):Â resiistance at 21.70
Nvidia
(
NVDA |
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News |
PowerRating):Â resistance at
78.88
Texas Instruments
(
TXN |
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Chart |
News |
PowerRating):Â resistance
at 29.74
These numbers are useful when
you combine a long or short position in the stock with simultaneous support/resistance
in the Spooze or Nasdaq. Trading off
these numbers without confirmation from the futures greatly reduces your odds on
the trade due to high correlation.
I will be in TradersWire
this morning to share my observations with you. As
always, feel free to drop me a comment or question at davef@tradingmarkets.com.
Take care,
Dave
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