How Being Lazy Can Be Brilliant
Today’s piece will be pretty much the same as the recent columns, however,
the point is still the same, if your are quick, disciplined and willing to take
the foot off the gas around 11:00 AM EST, you can knock down some good trades.
I was talking with a guy who has signed on to do mentoring with me over the
next several weeks. We were going over the general framework when we got to the
part about him coming to my office at the end for two days of trading to tie it
all together. I told him that each day I will not sit there after 11:00 AM EST
just to appear as though I am being productive or feel the need to execute
trades just for the sake of it. His response was:
“Great, I want to be able to get to that level of
confidence where at 11:00 AM I can do just that, nothing, if nothing is going on.”
I stopped, thought a moment, and then went on to say:
“It really has nothing to do with confidence, it is
just a simple fact that I learned many years ago, never trade the dead zone.”
My style of trading (HVT) has no
application in the dead zone. Sure, there may be some exceptions, but not often
enough to warrant sitting in front of your screens. Forget about that
possibility of missing out on something. You won’t. Maybe another style of
trading that you implement may offer up something, but not HVT.
In a perverse way, us HVTers are getting an unwanted vacation currently. Work for an hour and a half, then kick back. Sounds lazy? Hardly, it is
brilliant, holding on to gains in this market is an act of discipline. Yes, it
generates income, but frankly I prefer to be a bit busier in terms of my trade
frequency.
The two charts above depict a beautiful comparison of
how the S&Ps can get you into stocks that are exhibiting a similar pattern. In
this case, [MWD|MWD]
matched up pretty well. I watch about 3-4 stocks and will go with whatever one
fits this profile.
The S&Ps did manage to take out the low from 2/13
(805.25), so barring any significant buying, it seems reasonable that a test of
the October 2002 lows (768) is within reach. You can count on a choppy ride
down. But once in that area, we may see some decent volatility as traders do a
lot of jockeying with positions.
With the overnight S&Ps breaching 800, I have a funny
feeling that a fade of the opening may just be the trade du jour. Too many
times in recent months when we have seen a minor capitulation coming into the
opening after several sessions grinding lower, the bounce has been meaningful. The trend is down, so I will not be looking to fall in love with this trade, but
for a few moments it could turn in a nice gain.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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