Does Anyone Care?

• April 3, 2002
• Dave Floyd

The lack of intraday volatility lately is truly
stunning. Yesterday we had the Factory
Orders number come in well below consensus estimates, and the market
just sat there. That in and of itself is fine. In fact, one could view it as
bullish. But absolutely no reaction? Combine that with the rising oil prices and
tensions in Israel and you have to wonder, "What will it take to get this
market to trade well?"

I do not know the answer. In the meantime, I will continue to play some
"story" stocks and fading some of the more extreme opening prints. For
instance, yesterday Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating) blew
through its lower Bollinger Band, offering a nice opening reversal. After that,
the market just meandered and offered very few trades with a good risk/reward
ratio.

For those of you who did not notice, the range for the whole day in the
S&Ps was 6.1 points. This is the narrowest range I recall in many years.

Gold continued its march higher in the early going, but even this sector
traded in a lethargic manner. By the time the afternoon session got underway,
they too had given up all the early gains. Taking my usual trades off the 15 and
hourly bars was anything but smooth.

Revisiting a stock I had mentioned early in the year, AutoZone
(
AZO |
Quote |
Chart |
News |
PowerRating), appears to be breaking down again on the daily chart. The kicker
would be if it got back below 63.80 (Point A), then, of course, breaking 61.23
(Point B).

I do not have any easy answers to the current situation.  My approach
has been, and will continue to be, the following, until a shake-out happens:

1. Trade very assertively on the opening.
2. Be incredibly selective after the first 45 minutes. In fact, I am not even
   looking for quick scalps after that, I am immediately looking for setups on
   longer time frames.
3. Eliminate completely any marginal setups. Many traders often go for
   marginal setups, and while that is certainly a viable approach and works for
   many traders, this is not the environment for it.

If you can get through this period with no scars and show a profit,
you have proven your ability to weather a tough market. Remember, "What
does not kill you, will only make you stronger."

Keep your eyes and ears open at 10:00 a.m. EST for the release of the ISM
Report. It may provide a quick volatility spike depending on how the number
comes in. Consensus estimates are for a reading of 57. Any major deviation from
that number will prompt me to trade the number.

On a lighter note, I wanted to share with you something I read over the
weekend. It appears that the good people over at Apogee
Research have uncovered a potential investment barometer worth
noting. Based on their research, the country of the woman who graces the cover
of the Sports Illustrated swimsuit issue
will typically embark on a four-year bull run. Preposterous, you say? Look at
these facts:

So who is the lucky country this year? Believe it or not – Argentina. This
will certainly be a tall order, but given that the economy and the stock market
have been beaten up pretty bad, it may just be due for a bounce.

Key Technical
Numbers (futures):

S&Ps	Nasdaq
1159	1485
1154	1459-62
1145-46	1435-37
1139	1428
1136 (critical support, still support)	1411 (critical)
1131	1387-90
1126 (key)	1366
1116	1336
1112	1318

 

As always, feel free to send me your comments and
questions. See you in TradersWire.

Dave