Hourly Trend Must Be Respected
The Qs are testing a few
critical multiple price vs. stochastic divergences
as we approach midday, which may provide some solid clues to the afternoon and
Friday trade. Specifically, we’re testing a potential double bottom on
the hourly chart which has already been fueled in part by a climb off a
mid-morning three-minute bottom.
Bottom line? We remain in an hourly downtrend
from yesterday which must be respected while asking ourselves (by viewing the
divergences) has the significant momentum selling ended for the time being?
Please understand this is not
a prediction, as time will provide the answer, yet I’m intrigued by the pattern
— keeping in mind yesterday’s drop (see below) was fueled in part by rumor.
Chicago PMI did come in stronger than expected,
yet has had little relevance in the early trade aside from the usual knee-jerk
shenanigans. Longer term, the Qs have to reestablish an uptrend north of current
resistances in order to stimulate the buy-side, most likely in cup-and-handle
form should we climb north of $35.00. Should we lose the intraday $34.13 low,
the sell-side may raise its head again, and we’ve certainly seem some strong
trending afternoons recently.
Thursday
February 28, 2002 12:00 PM EDT
Back to yesterday’s
column, I mentioned that I had been avoiding much of a short bias over the
last few days “unless and until we got
consolidating uptrend supports coupled with a break.” And while the
afternoon break (ok, more like the “Tower of Terror” drop fueled in
part by more
(
INTC |
Quote |
Chart |
News |
PowerRating) rumors) indeed occurred from extremely tight three- and
13-minute trend support consolidation, you may have found the short entry timing
to be rather difficult given:
(a)
The “sloppy” 15-MA cross which actually occurred during
consolidation approximately an hour before the cliff drop and…
(b)
The lack of subsequent and significant low-risk pullbacks aside from any time
frame other than the one-minute microscope until a full 30 NQ points, or $0.60
on the Qs.
Frankly, I found balancing a
low-risk short entry with not chasing a bit of a challenge. If you caught the
early short, congratulations (by the way, try finding an uptick to short a stock
on the elevator drop and I have one word to describe fills: “impossible.”
Advantage Qs — again).
Back on a serious note, in the event you missed the drop and are kicking
yourself, keep in mind there is no such thing (in my view) as a missed
opportunity. Heck, you could have been on the golf course or taking a late lunch
when you were presented with such a post-tank scenario in which case you
probably wouldn’t have thought anything of it as you worked to position
effectively. You may also save a few dollars in making your shoes last longer.
Good Trading!