Be alert for a ‘Buy the news scenario’ today
Stock index
futures opened Thursday’s session under pressure after GM received a subpoena
from the SEC regarding their pension practices and some dealings with Delphi.
After a brief pop, the sellers took over again with a methodical move down that
was confirmed by the usual suspects such as the TRIN, the A/D line, and Up/Down
volume.
The lunchtime chop was followed by a textbook renewal of the
downtrend as the equities markets really couldn’t get their act together the
entire day. News that White House aides Karl Rove and Lewis Libby could be
indicted on formal charges on Friday also weighed heavily. Remember what I
said yesterday about too many talking heads expecting a rally.The boat
dumped them on their egotistical heads today. Breadth started out weak and
just continued to worsen as the day went on.
Friday morning gives us a couple of economic reports
with a look at Q3 GDP at 8:30 and the preliminary Michigan Consumer Sentiment
Index at 9:45. The big focus will probably be on the White House as I
outlined above. However, be alert for a "buy the news" scenario if formal
charges are brought against them.
Is Your Trade Management Active or Passive?
Trade management is ACTIVE management. My stops fall into 3 main camps. The 1st type is the worst case scenario of
the amount that I’m willing to risk. This means that I want to use as wide a
stop as possible so that the market can move without hitting my stop. The
2nd type of stop is a technical one. It’s placed where the market
shouldn’t go. In other words, it’s placed at the point that my original
analysis would probably be proven wrong.
Using the Average True Range for
the time period I’m trading is especially useful in setting a stop.
Money management decisions should be automatic
and mechanical. Don’t subject yourself to making risk judgments under
pressure. A person simply performs differently when under pressure.
Once I have a resting stop in, I like nothing better than to turn the trade over
to the "market gods. "It relieves the anxiety and I don’t feel compelled to
watch each and every tick. I can let the trade do its thing, and when I’m
stopped out, I’m normally glad that I was stopped. Sometimes, I find
that by placing a resting stop in the market, it allows me to stay with the
trade a bit longer.
Another type of stop I use is a time stop. I
give the trade a certain amount of time to do its thing, and if it’s not working
after that period of time, I start reducing my size. Limited time exposure
in the market equates to limited risk. The main point is to start thinking
about where you’re going to place your orders BEFORE the market gets to your
price.
Daily Pivot Points for 10-28-05
| Symbol | Pivot | R1 | R2 | R3 | S1 | S2 | S3 |
| INDU | 10269.67 | 10309.50 | 10389.04 | 10428.87 | 10190.13 | 10150.30 | 10070.76 |
| SPX | 1183.48 | 1188.07 | 1197.24 | 1201.83 | 1174.31 | 1169.72 | 1160.55 |
| ES Z5 | 1186.42 | 1192.08 | 1201.67 | 1207.33 | 1176.83 | 1171.17 | 1161.58 |
| SP Z5 | 1186.27 | 1191.53 | 1200.57 | 1205.83 | 1177.23 | 1171.97 | 1162.93 |
| YM Z5 | 10285.00 | 10332.00 | 10424.00 | 10471.00 | 10193.00 | 10146.00 | 10054.00 |
| BKX | 97.69 | 97.94 | 98.44 | 98.69 | 97.19 | 96.94 | 96.44 |
| SOX | 431.63 | 435.63 | 443.62 | 447.62 | 423.64 | 419.64 | 411.65 |
Weekly Pivots for the Week of 10-24-05
| Symbol | Pivot | R1 | R2 | R3 | S1 | S2 | S3 |
| INDU | 10280.49 | 10367.51 | 10519.79 | 10606.81 | 10128.21 | 10041.19 | 9888.91 |
| SPX | 1182.48 | 1194.41 | 1209.23 | 1221.16 | 1167.66 | 1155.73 | 1140.91 |
| ES Z5 | 1186.17 | 1198.58 | 1213.42 | 1225.83 | 1171.33 | 1158.92 | 1144.08 |
| SP Z5 | 1186.20 | 1198.40 | 1213.00 | 1225.20 | 1171.60 | 1159.40 | 1144.80 |
| YM Z5 | 10302.33 | 10393.67 | 10547.33 | 10638.67 | 10148.67 | 10057.33 | 9903.67 |
| BKX | 95.87 | 97.70 | 99.01 | 100.84 | 94.56 | 92.73 | 91.42 |
| SOX | 437.82 | 450.50 | 459.16 | 471.84 | 429.16 | 416.48 | 407.82 |
Please feel free to email me with any questions
you might have, and have a great trading week!
Chris Curran
Chris Curran started his trading career at the
age of 22 with a national brokerage firm. He combines fundamentals and
technicals to get the big picture on the market. Chris has been trading for 15
years, starting full time in 1997, and has never had a losing year as a
full-time trader.