How To Trade An Intermediate-Term Top
If you want to learn how to locate and trade an
intermediate-term top in the S&P 500, the SPDRs
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semiconductor index
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Views From The Trading Desk on TradingMarkets.com this morning is
required reading.
The article combines pattern, price, market dynamics
and geometry to show you how to set up an excellent risk-to reward short
trade in these markets.
Stocks have come back from a down opening to slightly
positive levels. Yet again, the indices are shaking off negative
corporate news, a point made by TradingMarkets CEO Larry Connors in last
weekend’s market commentary. Stocks are also coping well with the biggest
drop in wholesale inflation ever.
The Dow is up 19 at 9606, the Nasdaq is up 4.72 at
1832.49, and the S&P 500 is up 2.54 at 1121.08.
S&P 100
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and Disney
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is down 7% at 39.58, but Disney has erased an early 4% loss, even
after citing reduced ad revenue from its ABC flagship network and much lower
attendance at theme parks in the wake of 9/11.
As reported yesterday, money is flowing into the most
speculative sectors of the market. Internets
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territory. Both sectors have outpaced major indices with gains off the
September 21 low in excess of 50%. This compares with a 36% gain in the
Nasdaq Composite and a 20% gain in the S&P 500 index.
A surprisingly big drop of 1.6% in the producer price
index, the biggest monthly drop ever, seems like a good thing because it
works to keep inflation contained and legitimizes the Federal Reserve’s
recent drastic rate-cutting action, while giving the central bank room to
continue easing should worsening economic conditions merit. But the downside
of deflation is if consumers hold back on spending, planning
instead to hold back on purchases until an anticipated drop in the price of
goods. Tightfistedness from consumers would cut into economic growth and
corporate profits, both factors that the recent rally is essentially
discounting.
Dynergy Inc.
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Interactive pointed it out on its first five-minute bar out of a Slim Jim.
Dynergy is said to be acquiring Enron
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