‘I Survived Earnings Week’
Major bear moves continued
into Friday’s close on all major short-term and intermediate timeframes in both
the U.S. and Europe as daily trends are
starting to flex their muscle. For the week, the S&P lost 18 while the Nasdaq
gave back 19 in a week that was chock-filled with major — with a capital “M”
— intraday setups, particularly on the short side. So much for the summer
doldrums.
Wednesday’s overnight gap into strong downtrend support on a first daily
pullback on the daily was the gift of the year — if not the decade — with a
tip of the cap to Mr. Gates’ “special dividend” that for some
reason sent folks to the buy/cover button with no respect for the screaming
daily chart. 52 points later
(one-day NQ drop)Â proved
once again there’s no such thing as a random walk down Wall Street.
   Â
Yet let’s again let the charts do most of the talking this week (we’ll leave
the “I told you so” B.S. to the pundits) as the charts — not I
nor anyone on this planet — continue to speak the only truth, and then touch on
some random trading musings given the events of the past week, Andy Rooney style
                                                 S&P 500
Â
                                            Nasdaq 100
Â
                                        Moving Avg Legend:Â
15MAÂ Â Larger
Timeframe 15MA
                           See https://www.donmillertrading.com
for Setups and Methodologies
                                                       Â
U.S. Charts © 2004 Tradestation
Random Trading
Musings
It’s Andy Rooney Time.
Every time we hit this time of year, I think about printing some T-Shirts with
the encryption: “I survived earnings week”, as navigating around the
crazy opens, closes, and gaps can be about as hazardous as navigating around
Boston during the upcoming Democratic National Convention. Let’s see, we
have the Big Dig, the DNC, tourists, and the Yanks/Sox … and they’re closing the
main roads. TV and painting sound good for the weekend itinerary. Keeping
the current longer-term trend in mind (in this week’s case, the daily) and
brushing off the old “let the trade be so obvious, I’d be stupid not to take
it” criteria can be among the more helpful life preservers.
In what I referred to above as arguably the setup of the year thus far, a tip of
the hat to Microsoft for providing Wednesday’s gift gap into the first pullback
on a sharply emerging daily downtrend. It was also a reminder of why I
personally don’t care to hold overnight by entering positions on the close, as
sweating out a further 10 point NQ run in Wednesday morning’s Globex session
would have generated as much steam as my four-month old boiler which literally
blew its safety valve right at the NQ peak and spewed steam throughout my
basement. It gave new meaning to the term “trading in a fog”! Perhaps I have
another indicator now. (On as serious note, any plumbers feel free to email
me as the installer is stumped after having replaced two valves and the problem
continues to recur.)
After backing and filling at one of the mile markers on my equity mercury
thermometer (ok, mixed metaphor, but see my
June 4 column) over the past few weeks and frustrating me a bit — ok,
pissing me off — perseverance, or perhaps stubbornness finally paid off this
week with a boiler-like thrust beyond a point where I can place a trailing
earnings stop. Resistance now becomes support, or at least a stop which
would require cause for reevaluation (Trust until broken, right?). While
you hopefully know by now that I don’t care to talk about successes, it was the
first of four benchmarks on the way to a rather significant milestone, and so it
deserved a brief pause for reflection. Actually, I thought about it for two
or three minutes, muttering something like
“About time you nitwit.”Â
Next trade please, as the past continues to be irrelevant for future
earnings. Yet consider treating your equity mercury or curve as a futures chart
if you’re challenged with similar glass ceilings. It can be a fun way to
monitor and manage a serious and daunting business.Â
I wonder if MSFT will come out with a special dividend v1.2 in the near future.Â
Stay tuned.
Been seeing lots of bogus 3000 bids and asks on the ES market depth during thin
markets … more so than the normal shenanigans and often near the highs and lows
(hmmm, wonder why). Few things make my day better than hitting them when the
charts line up and then seeing the air pocket after the bluff is called. Sure
beats complaining. Let’s think about that … complain or trade … hmm, tough
choice. Charts rule, bluffers drool.
Speaking of bluffing, for those who trade EC: Ever notice that joker that often
keeps 100 to 200 a smidge above or below market against the immediate
chart trend? Nothing like not having confidence in your ability to read markets
by resorting to kindergarten techniques. Oh and by the way, it borders on
illegal. Duh. Has been a nice confirming signal though.
At the ripe old age of 43, I finally bought my first pickup this week. Of
course, that was right before the boiler blew. As I mentioned at TM2001 in
Vegas, managing expenses helps keep the “have to perform” stress meter at
a reasonable level so I again went with a three-year old with some miles on it.Â
Let someone else pay the early depreciation.
It be will interesting to see if the Dow hits 9000 before the Red Sox are
officially eliminated from contention. Heaven help the longs if the daily
downtrend extends. And may heaven always help the Red Sox.
Maybe I’ll change the mercury thermometer to a pressure gauge over the weekend
to stay with the theme of the week.
Good Trading and Have a
Great Weekend.
Â