Holding Support Is Key
The Qs have reversed course
thus far this morning, following through
on a textbook 13-minute stochastic vs. price divergence setup on the early
morning NQ retracement toward the psychologically key 1500 level. The Qs
currently remain capped by hourly resistance to the north as we approach midday,
and holding current trend supports on the lesser intervals will be key in
gauging whether the hourly lid will remain intact longer-term. The
semiconductor and storage sectors have been strong, fueled in part by upgrades
which — to my shock — may actually have reflected somewhat decent market
timing. Nevertheless, there remains much technical work in terms of basing and
follow-through to propel the Qs beyond critical hourly resistance, and keep in
mind we may be subject to more earnings-related whipsaws as the week continues.
Wednesday January
23, 2002Â 12:00 PM EDT
Yesterday’s trade
provided yet more evidence why low band stochastics are often irrelevant and
potentially dangerous in terms of triggering buy signals, and that only
trend reversal triggers can provide low-risk entry opportunities. From a trading
buy perspective, and as I mention in
the video, I’ll take an 80-band stochastic reading upon price support over a
20-band reading in a downtrend every day of the week.
Continued thanks to those who keep e-mailing their feedback, both positive and
constructive, which has significantly helped me craft this column, the popular
video, and upcoming QQQ educational expansion.
“Don, keep up the good work … you make the learning curve a lot
easier.” J.A.
“I really appreciate the time and effort you put into your column. I can’t
begin to tell you what a difference you’ve made for me.” D.P.
Good Trading.