Adapt And Survive
Anyone who has been participating in the markets for
any amount of time knows that “change” and “variety” is as
commonplace as the weather on a day-to-day basis (California being the
exception, lol). While there is no way to know specifically what will happen
tomorrow, I do know one thing:Â The trading range which began in mid-October
continues despite many “key” levels being breached. I can only speculate, but it
does appear that the market has once again morphed, and this time it may take a
while to adjust.
Traders and investors who have become accustomed to extreme volatility are
now being faced with a far more docile market. Many moves intraday, while
fierce, appear from nowhere. Welcome to late 2002. These moves will eventually
become identifiable, but it appears that a little screen time is in order.Â
Do not get me wrong. It is not a dire situation. There are trades, and there
is money to be made, but if you do not adjust and continue to push full steam
ahead, you will be missing the big picture. The big money is always made by
those who first “discover” or figure out how the game is being played.
So what adjustments need to be made? For me, it is simply a matter of pushing
the time frame out (5- and 15-minute charts). The noise on the one-minute charts
right now offers very little edge. One thing that it is telling me, however, is
that the narrow-range bars being so close together indicates more of a trending
nature to the market on an intraday time frame. Witness the chart below. The
S&Ps, while making a consistent 3 point move higher, did it in 30 minutes versus
the 5 minutes as was witnessed just a month or so ago. The solution: forget
about immediate gratification, learn to pick a level, make a stand and respect
your stops.
The following chart, is that of the S&P futures on a 5-minute basis. Does the
pattern look familiar? It should. It is the same type of “Buying the pullback
pattern” I have been talking about since joining TradingMarkets. The only
difference here is that you are required to hold onto the trade a few minutes
longer.
So, in essence the patterns are the same as all HVT
setups, they are just taking longer to develop. Look at it from a positive
standpoint: Learning to navigate any and all market environments is the hallmark
of a trader who has longevity. Don’t think for a moment that once the volatility
comes back you cannot turn on the heat. In the meantime, the market is speaking,
listen. Adapt and survive.
With the preceding in mind, you may want to keep an eye on these stocks as
potential long candidates. They were spotted by going through a bunch of
15-minute charts. The fact that they are highlighted here does not mean it is a
“BUY” signal, it simply means that these stocks have pulled back into support
and are poised for a move higher if market conditions permit.
Boston Scientific
(
BSX |
Quote |
Chart |
News |
PowerRating)
Ingersol Rand
(
IR |
Quote |
Chart |
News |
PowerRating)
St. Paul Cos.
(
SPC |
Quote |
Chart |
News |
PowerRating)
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| *925-27* | 1080.50 |
| 918 | 1071 |
| 908 | *1065* |
| 905 | 1058.50 |
| 903 | 1048.50 |
| *897-98* | *1035* |
| 893 | 1021.25 |
| 887 | Â |
* indicates a level that is more significant.
As always, feel free to send me your comments and
questions. See you in TradersWire.