Higher Ground Still Possible
A late-day rally off of critical support
kept hopes alive that higher ground is still possible. I was not in the office
in the afternoon, but it appears as though the rally was rumor-driven vs.
old-fashioned demand. We will wait and see. The one positive aspect of the
current market is that it is trading very technically off of support and
resistance areas, KTNs. Granted, the moves take a while to develop, but with a
reasonable stop in place, patience will pay off.
Take a look at the S&Ps, for instance, on a five-minute chart from
yesterday. They put in a double bottom at 1076, one point above yesterday’s KTN
of 1075-75. As noted above, the catalyst may have been a rumor. However, the
rally shot straight up to the other KTN noted, 1087, where the rally lost
momentum. A long at the 1076 level with a stop below the day’s low, put you in a
good risk/reward scenario.
Looking ahead to today, it appears as though there is some positive economic
news for traders and investors to play off of. I suspect this will break us out
of the current doldrums that the indices are trading in. So, keep an eye on the
technical levels as well as the tech stocks since it appears that on up days,
these are the stocks the big players go after. Playing where the “big
money” is puts the odds even more in your favor when you identify quality
setups.
Naturally, this may pour some cold water on gold stocks, but at the same time
offer an opportunity to reestablish some longer-term positions in them. I am
still suspect that this one report on Durable Goods
will change the tone of the tape very much. Of the gold stocks I watch, Gold
Fields Limited
(
GFI |
Quote |
Chart |
News |
PowerRating) appears to be the one poised for a nice
pullback. Stocks like Durban Roodepoort
(
DROOY |
Quote |
Chart |
News |
PowerRating), Newmont Mining
(
NEM |
Quote |
Chart |
News |
PowerRating) and Harmony
Gold Mining
(
HGMCY |
Quote |
Chart |
News |
PowerRating) are quite extended, and for me, do not
offer a good risk/reward at this point on the long side. Remember, let the
stocks come to you and take advantage of positive slippage.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 1125 | 1333 |
| 1111 | 1320 (key resistance) |
| 1096 | 1289-93 |
| 1085-86 (opening only) | 1267 (opening only) |
| 1082 | 1256 (confluence and key support) |
| 1075-76 | 1242 |
| 1067-69 | 1224-29 (key support) |
| 1045 | 1205 |
As always, feel free to send me your comments and
questions. See you in TradersWire.