Here Are A Couple Of Trades I Did Yesterday
As we enter day
two of the holiday-shortened week, we are now sitting at some levels
that are far higher that most might have expected last Friday. The dollar’s
strength seemed to have put a solid bid under the market yesterday. The market
opened higher and never looked back. Housing and chip stocks led the charge
higher. We got the bounce off the 50-day
MA in the S&Ps, worked our way higher just short of the 1052 resistance level
that Bo had outlined in Friday’s column, and closed just under it. Keep an eye
on 1051-1053 as a resistance zone going forward. Over this, the previous swing
high of 1064 becomes a logical target. If 1052 holds as resistance, it will
take a move under 1034 before downside momentum may pick up. Otherwise expect
some chop over the holidays between 1034-1053.
Despite the market trading higher I opted to
continue to focus on the mining stocks which were fairly weak on the heels of
the dollar’s strength. Would I have been better off trading trading the other
two stocks in my arsenal, Citigroup (C) or
Texas Instruments (TXN)? Perhaps. Yes, they
were trading with the market, and TXN is in
the sector that was clearly in play, but even with that, they still continue to
trade in a very labored pattern. As I mentioned last week, I am finding it
imperative to focus on only one stock/sector at this time, and I have chosen to
stick with the mining stocks. So the few trades I did yesterday were in
Newmont (NEM). However, I did spot one set-up
in TXN (see chart below) that I could not pass on.
The two charts below illustrate a couple of
trades I did. Both were based on a 5-minute chart instead of the typical
1-minute. The price action, was bit too slow to drill down to a 1-minute chart.
This is a tactic I use frequently during holiday periods and in the summer. Yes,
I did try to Fade the Gap in NEM, but
it did not work…a loss of 15 cents.
Turning back to FX, as I had mentioned last week
the DXC was quite oversold and was due for a
bounce. While I do not think this will be a long-term change in trend, it will
put pressure on the other currencies, as was witnessed in the
Yen (JPY), Euro
(EUR) and Swiss Franc (CHF). While I have no
intention of shorting these currencies (bucking the trend is a losing battle,
remember last weeks trade in the JPY?), I am keeping a close eye on long entries
in all three. I will keep you posted on these developments. I did however use
the present weakness in the Euro to establish a short in
EUR/JPY at 128.61. The chart below illustrates the rationale for
this trade. However, unless it decisively cuts through the 50 day EMA, the
trade may not play out. Again, I will keep you posted.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and
questions.