Hitting The Curveball
It is amazing. Whenever one complains, or
better said, gets used to the same old thing every day, that is when
"they" throw you a curveball. Yesterday morning was that day. With the
futures gapping down about 7 points on the first print, it was reasonable to
expect a bounce. What we got was a solid bit of buying, rarely seen in recent
sessions. Although that changed later, more on that below.
For me, it started off as a bad day. I got zinged by the opening reversal in Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating) on more shares that I would have liked. Nonetheless, I had to shrug it
off and move on. I went right over to Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating)
and kept my head down and traded assertively. It felt as though this was a
different morning, there was a lot of strength early on. Not only did I recover
the loss from the opening, but managed to put myself in good standing for the
day. You can never let a bad trade get you down, especially when it was a good
setup, like the Calpine trade. The trade simply did not work out.
The S&Ps during the first hour were a traders (HVT)
dream. Several pullbacks in an uptrending market allowed for multiple entry
points on the long side. Several of the pullbacks were not "textbook,"
meaning they did not fit into the classic pattern, but were simply identified
due to recognizing that the tape was strong. This comes with experience, and
certainly offers a good argument to a purely systematic approach to the market.
Tape reading is an invaluable skill. Without it, I would have missed several
trades simply waiting for the textbook setup.
The chart below shows several potential entry points on the long side if you
were using the S&P futures as your leading indicator. The ones shown with Blue
lines are what I would describe as the textbook setups. The ones in Pink
are the ones taken based purely on the "tape" and somewhat ignoring
the technicals.
The afternoon, while far less volatile, was somewhat surprising, as the
market gave back all the morning gains. So despite some assertive buying, the
sellers once again showed up to spoil the party. This is becoming all too
common.
For those of you who are interested, I did an interview with Ike Iossif of MarketviewsTV
the other day. I not only discuss the current environment for daytrading, but
also offer some longer-term views. There are several audio files on the site, so
check it out.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 1096-98 (massive confluence) | 1273 |
| 1088 | 1256-58 (key resistance) |
| 1078-79 (confluence) | 1243 |
| 1069-70 | 1218-22 |
| 1064 | 1175-77 |
| 1054-55 | 1140 (contract low) |
| 1045 (contract low) | |
| 1037-38 |
As always, feel free to send me your comments and
questions. See you in TradersWire.