Don’t Fall In Love With Positions

• January 31, 2002
• Dave Floyd

I
don’t know about you, but the last couple of
days — while certainly welcome from a volatility standpoint as well
as directional — have been exhausting. It
was the first time in many months that one was able to trade bell to bell.
We have had two “outside” days, and the heavy dose of news is
behind us. Nothing has changed,
economically speaking, but it appears as though the market needs to digest the
price action of the last few days.

I would expect that
technical levels will continue to be the guide intraday.
Keep a close eye on 1119 as the central indicator regarding the intraday
trend. For those of you inclined to look
at some sectors that have been pretty beaten up but are putting in a base on
hourly bars, look at some of the stocks in the consumer finance and bank sector.
Stocks like Capital One Financial
(
COF |
Quote |
Chart |
News |
PowerRating),
Household International
(
HI |
Quote |
Chart |
News |
PowerRating), Bank
of America
(
BAC |
Quote |
Chart |
News |
PowerRating). These
stocks may offer the short-term trader some nice setups, however, these stocks
are incredibly vulnerable longer-term, so do not fall in love with your
positions.

Key
Technical Numbers

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

Dave

P.S. Some of the short positions I had highlighted in previous columns have
done exceedingly well in the last few sessions, with gains of 5%-10%. Remember,
the market does not usually toss out returns like that in such short-term times
frames, and you can always get back in when the market re-establishes its
downtrend.