Go For The Throat

• November 28, 2001
• Dave Floyd

Two in a row?
Let’s hope so. Yesterday’s session offered traders a market that by
historical standards was marginal, but compared with recent sessions, certainly
offered many good setups. Most of the reason was simply due to the range of the
futures being greater, but also due to the fact that we actually witnessed some
good selling pressure. Yeah I know, it has been a while. While I have never done
any statistical studies to prove or disprove this, my experience has been that
down days offer much better trading. Selling pressure seems to be very decisive:
Fear seems to dictate actions more than rationalization. Up days tend to be more
calculated and methodical, although pockets of greed can offer very decisive
action too.

The bottom line: Trading was pretty
good yesterday. As of right now, 5:15 a.m. PST, it appears as though the market
will be under pressure on the opening. Get ready for some good action on the
opening. Be decisive, but also selective. On a per trade basis, our office is
still doing far fewer trades on average, even yesterday. That strategy is
proving to be the best way to preserve/increase capital. If the market again
takes its cue form the tech sector like it did yesterday mid-day with Intel
(
INTC |
Quote |
Chart |
News |
PowerRating)‘s announcement, make sure you are watching the SOX

(
$SOX.X |
Quote |
Chart |
News |
PowerRating).

Traders who have been around for a few
years know that the majority of one’s income in any given year is generated
during “pockets” of unusual price action. The remainder of the time
(60%-80%) is simply a slow accumulation. The market may very well be on the
verge of one of those pockets. Be ready and go for the throat if in fact the
market starts to get volatile. The current situation, a long run to the upside
coupled with a still unclear view of the economy, is a recipe for sharp downside
price action. As most of you know, this rally to the upside has been odd, a
reluctant rally, as if traders and portfolio managers have been dragged in
kicking and screaming. A couple of weeks of very volatile trading can make or
break your year. Trust me, I have seen it many times over the years.

Key
Technical Numbers

As always, feel free to send me your
comments and questions. Also check in TradersWire
throughout the day. There are many other KTNs
that I calculate intraday that I point out in there. Additionally, there are
many other well-informed traders offering their insights too.

Dave