Cross-Referencing Can Be A Big Help…

  • March 3, 2003
  • Rob Hanna

Once
again today the markets failed to follow through on a potential
rally. After a decent move up last
Thursday and Friday, and a big move up early today, it just rolled over.
One of the things that strikes me when I look at charts of the S&P
500 and Dow Jones
Industrials is that we have not yet had three up days in a row in
2003.

 

I wanted to just write a quick
bit today about the importance of cross-referencing commentary and reports
provided on TradingMarkets, and show an example of how this could have helped
some of you in the last few days. When I
use the term “cross-referencing,” I mean looking at reports and
commentary not related to the time frame in which you trade, to help you
understand how others may be viewing your stock.

This practice is useful for
both short and intermediate-term traders. The
example I would like to look at is Zimmer Holdings
(
ZMH |
Quote |
Chart |
News |
PowerRating). On Thursday, Feb. 20, ZMH
broke out of an intermediate-term base as it crossed resistance at $43.00.
This is a trade that could easily have been taken by intermediate-term
traders, as ZMH also exhibits strong fundamentals.
Over the next few days, ZMH gained over 10%, and the trade was probably
looking pretty good to most traders who entered a little above $43.00.

 

It didn’t look good to Derrik
Hobbs, though. On Feb. 26, Derrik
showed how ZMH had just completed a butterfly pattern, and was a potential short
candidate for a swing trade. Intermediate-term
traders who read this would have had the opportunity to make a decision on
whether they might want to take some profits and perhaps look to re-purchase
some of their shares on the anticipated pullback.
They could also consider adding to their positions if the price moved
above the Fibonacci resistance levels that Derrik mentioned in his report.

ZMH closed today at $43.70. 
As of right now, it has still not violated its intermediate-term pivot
point. Long IT traders and short-term
swing traders are both making money right now.

When an intermediate-term long sets up as a short-term short, you have a
decision to make. In future articles I
will talk about some of the factors that should go into this decision, but the
first step is recognizing the setups. One
of easiest ways to spot setups in alternate time frames is simply
cross-referencing other reports and commentary.

Feel free to email me with any questions or concerns.

Good Trading,

Rob
Hanna