Here’s Why These Four Trades Worked
Finally, a little volatility. Despite yesterday’s narrow range in the opening
hour, I managed to find four trades that worked just fine. What is important
about these trades is that they were accomplished by what many traders overlook,
focusing on only one stock. Most of us, when bored by the price action, move on
to other areas in an attempt to find that nugget of prosperity. Rarely do we
find it, most times it was right in front of our face to begin with.
Yesterday’s trades were like this. I remember watching the S&Ps try to
break through 940 to the downside. I knew if we got that, we would have some
decent action. However, due to day-in-day-out observation of color=#0000ff>Citigroup
(
C |
Quote |
Chart |
News |
PowerRating), I felt the market was not heading lower. C
was trading at the highs while the S&Ps were trading lower. Given that the
S&Ps had been led by the action of the banks in recent sessions, it was
reasonable to assume that to be the case again. Sure enough, after three failed
attempts at breaking 940 and C sitting on the highs, the push up came, and C
went on a nice move higher.
Was this trade a result of crackerjack chart reading? Luck? No, it was a
result of good old-fashioned tape reading. You could stare at the chart all day
and never see the same clues unfolding. As we all know, focus is what is
required in order to achieve great results. Tape reading is something that
requires focus. So, forget about finding the stock du jour, trade the stocks
you “know,” there are more opportunities doing that.
| Support/Resistance Numbers for S&P and Nasdaq Futures | |
| S&Ps | Nasdaq |
| 960 | 1175-1178* |
| 951 | 1166 |
| 945-947* | 1161 |
| 941 | 1157 |
| 936 | 1154* |
| 930 | 1152 |
| 925 | 1147 |
| 919-920* | 1140 |
| – | 1129 |
| – | size=2>1117-1118* |
Tomorrow’s piece will be more in depth and deal with a subject that I hear an
awful lot about recently, overtrading. This will be an insightful and helpful
piece.
My new trading service,
“Dave Floyd’s Trading Room,”
offering live real-time
audio commentary, analysis and alerts, is now available. I encourage you to check
it out.
Click here for more information.
As always, feel free to send me your comments and
questions.
P.S. I also have a new trading module
available which teaches how to trade my HVT style through bar-by-bar chart
simulations.
Click here for information about the module.