Another Reaction Day
The
Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) closed at a new low
— 2792.41 — as most of the Daytrader’s
Dozen gave up double-digit price, led by
(
JNPR |
Quote |
Chart |
News |
PowerRating) (-21% on a downgrade by
Morgan Stanley),
(
MERQ |
Quote |
Chart |
News |
PowerRating) (-17%),
(
CHKP |
Quote |
Chart |
News |
PowerRating) (-17%, which finally closed
below its 200-day EMA) and
(
BRCD |
Quote |
Chart |
News |
PowerRating) (-14%, which is still holding above its
200-day EMA). The NDX itself closed -4.9% vs. the S&P 500 -1.8% which is
still holding above its prior low. The BTK ended -10.5% while the Internets
finished -7.1% on both the DOT and IIX indexes. The brokers got whacked at -4.6%
and the BKX continued its 10-day slide. The semis were the best of the downs as
the SOX closed -1.4%. The MSH ended at -3.4%.
As you know, markets work
in perverse ways and if something can happen, it usually will. The Florida
fiasco totally took the legs off any attempt so far to rally into year end. The
Generals are in the bunker, still in shock, as the chosen ones implode. Investors
in mutual funds not in a tax-deferred account could have a double whammy this
year which is a loss on their fund and paying taxes on a capital gains
distribution. That is probably better than being a buy-and-hold investor, owning
one of the Investor’s Business Daily mutual fund index components such as
the Putnam OTC Emerging Growth fund, down 45% YTD and needing almost 100% gain
to get back to prior gains, assuming one didn’t pay the high tick.Â
The attempts at rally have
been good for short-term traders but not for position traders that have been
stopped out, at least in the NDX 100. The NDX 100 had a three-day 18% rally from
10/18-10/20 and then a 14% rally from 10/26 to 11/6, which looked like the good
position play until the hacks in Florida got involved. The S&P 500 had
gained +10.2% from 10/18-11/6, but so far has held above its 1305.79 10/18 low.
There will be another good rally in both
averages before year end.
The obvious perverse target
for the NDX 100 today is to take out the 2742.47 10/13 low, which would
certainly create an airpocket. I would look to play long after a reversal of
that low, or even use that low the same way you now use the open when you do
Trap Doors. After it breaks the low, you might get one or two wide-range bars
down, and then a narrow-range-bar reversal, which might give you an early
daytrade entry prior to the reversal of the low. I
point this out because it must be in your trading plan — it will happen very
quickly, and if you are not prepared in advance you will miss it. You should
keep very tight stops on these kinds of reversal trades.
Today will again be a
reaction day on the intraday charts. If you have already checked the screens,
you see that there are no stocks on either the 3-Day Wake Up Call or Change in
Direction screens (see links below). That should certainly tell you something.
face=”arial, helvetica”>(December Futures) | ||
Fair | size=2>Buy | size=2>Sell |
6.70 | 7.90 | 5.50 |
Pattern
Setups
Right now, both the S&P 500 and
NDX futures are green, but you all know how fast that can change. If we head
south, continuation entries or Opening Reversals on any of the chosen ones that
closed yesterday in the bottom of the range and below their 200-day EMAs are
good short candidates. If you can
make a chop when they go south, be ready to enter a long position on the
reversal of the Monday’s lows and you might catch it both ways. If we open and
remain strong — which is above the open — the first consolidation breakout to
new highs will be good, and that includes the chosen ones.Â
Other stocks to take a look at are:
(
TLAB |
Quote |
Chart |
News |
PowerRating),
(
MU |
Quote |
Chart |
News |
PowerRating),
(
ADI |
Quote |
Chart |
News |
PowerRating),
(
IBM |
Quote |
Chart |
News |
PowerRating),
(
NTRS |
Quote |
Chart |
News |
PowerRating) and
(
BAX |
Quote |
Chart |
News |
PowerRating).
Have a good trading day.
