If You’re Holding Overnight, Keep This In Mind
Despite a rather choppy and jagged nature to the
trading yesterday, it certainly offered far more setups than Monday’s
session. The only catch was the trades were only in the morning. The afternoon
only offered head fakes. I trust that you all sat on the sidelines and watched
casually or did something else. Hard-won gains from the morning should not be
given back.
So, what were the setups in the morning, and what was it that prompted me and
many others to disregard the afternoon?
Take a look at the chart below:
The PINK horizontal
line represents the critical 921 level, which I have been mentioning in my
column for the last few days. I deemed that level to be critical and to offer
some great trade setups. In this case, it only offered one.
You see, at Point A, despite the S&Ps making a thrust
lower and through 921, the stochastics are in an oversold position. The odds of
this trade playing out, based purely on that, are much smaller that I care to
take a trade with. The resulting move lower was somewhat muted, making any short
sale a real challenge to salvage any meaningful profit.
Conversely, a move back above 921 (Point B), while the
stochastics are oversold, would offer a very high-probability long. That is the
trade I chose. I picked up a position in Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating), and it tracked the move in the S&Ps
quite well.
Contrast that price action with the afternoon, and,
well, there was no comparison. No trend, just back and forth chop.
The other thing you will notice is that I am now
highlighting five-minute charts. While the setups are identical to a setup on
the one-minute chart, the low volatility makes a one-minute chart too noisy,
while throwing off a lot of false entry/exit points. The result is the ability
to navigate and profit in this market, and the duration and profit potential
being extended.
Looking ahead to today’s session, the S&Ps have not
given up a lot of ground after Monday’s big run and did manage to close above
921. So one would have to be somewhat bullish going into the session. As I
mentioned yesterday, though, the market is far more vulnerable to downside air
pockets than upside ones. While this has little bearing on intraday trades, bear
it in mind if you are holding overnight positions.
Short term I would look for support in the S&Ps at 915
and 907. If they manage to break Monday’s high, 934 is the first resistance area
that I see. The Nasdaq has near-term support at 1059 and 1045 and immediate
resistance at 1089.
In terms of stocks, TYC
has been trading well intraday. There is enough “buzz” circulating and volume
has been heavy. It should remain a good trader until some of the recent news
dies down.
I have been providing you with some ideas for intraday
trades for the last few weeks. I trust that you have found them helpful. Given
the nature of the market, these types of setups are a nice complement to your
intraday HVT
style trades. If you are looking for more specific entry, exit and target prices
on similar trades, I profile a handful each night
in my service.
| Intraday Setups | |
| Â | |
Stock |
Action |
| SPW | Short |
| WMT | Short |
| AIG | Long |
| CAH | Long |
ESRX |
Long |
| HDI | Long |
Â
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| *954* | 1104 |
| 939 | 1076 |
| 937 | 1073 |
| *932* | 1066 |
| 924.50 | 1056 |
| 916 | 1041 |
| 909-10 | 1035 |
As always, feel free to send me your comments and
questions.