Give Us Wide Range Bars!
The Dow Jones Industrial
Average closed just below its 20-day moving average yesterday
(7/30/01) as you can see on its daily chart below. I know we are still in the
middle of summer vacation, but the trading ranges of the past two sessions were
extremely narrow. One thing I can say is that narrow-range days will be followed
by wide-range days, and needless to say, wide-range days provide reasonable
trading opportunities for daytraders. Anyway, I’m getting tired of this sleepy
sideway market.
Shortly after 10:00 this morning
(7/31/01), weaker-than-expected Chicago PMI data were released. Initially, the
Dow sold off and moved back below its 20-day moving average. But the very next
bar, the index reversed to the upside, and this was a buy signal daytraders were
waiting for. (The red line indicates the level of the 20-day moving average.)
After quickly going through five-minute
charts of the Dow Jones’ components issues, I found Intel (INTC)
was challenging the top of an ascending triangle. At 10:15 a.m., the stock broke
out above the triangle, and the second breakout above yesterday’s high followed
at 11:05 a.m. (The red line shows the level of yesterday’s high.)
As I say often, it is helpful to
look at the index first before picking individual stocks for trading.Â
Till Tomorrow,