I’m Watching Gold…But Maybe Not In The Direction You Might Expect
I would venture to say that this week should serve
up some decent trading opportunities, especially opening reversals,
or as I call them, fading the gap. The reason: Companies, particularly tech
companies, will be offering first quarter guidance. Naturally, their outlooks
will either be non-existent or just horrible, but the “spin-meisters” will be
out in full force, so a big rally toward the 16th (Fib time cycle) is still not
out of the question. Nonetheless, it should put a bit of volatility on the tape.
I did a little checking on my trade sheets going back a few weeks, and it
resolved a question I had, although I was pretty sure of the answer. I have
either rarely traded in the afternoon session, or if I have, the win/loss ratio
certainly did not justify it. While I am sure that many of you have made the
same observation, it is time to now factor this data into your trading plan. Of
course, I am referring to only HVT trades.
There were several trades last week which took place in the afternoon, but were
geared and taken for different reasons. Does this mean do not trade at all in
the afternoon? Certainly not, but make sure your “filter” for identifying
high-probability setups is turned on.
After doing my usual weekend reading, and due to the fact that many companies
will be offering guidance, I will be keeping a close watch on
STMicroelectronics
(
STM |
Quote |
Chart |
News |
PowerRating) and
Texas Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating). From what I read it appears as though
Nokia has put on ice recent orders to these suppliers. Is it
factored in? Don’t know, but worth keeping an eye on if it is not widely known.
The other sector I will be closely following for both HVT and position trades
is the gold sector. But guess what? Not on the long side. The last few days
gold, as well as the mining stocks, have topped out. Bullish sentiment in this
sector is extremely high, and worse yet, the gold mutual funds were the best
performing last year. That in and of itself is the kiss of death. So am I basing
this decision purely on outside observations? No, there are valid technical
reasons as well, and by no means am I ruling out a move higher given all the
geopolitical items going on, but the short side is what most are not expecting,
and that is where you get the most bang for your buck.
Looking ahead to today’s opening, it has the look and feel of a good
fade-the-gap opening. Wait and see how everything opens before jumping in. The
way trading has been lately, bids seem to be in abundance.
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Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| *965** | 1163 |
| 959 | 1125 |
| *954* | 1116 |
| 939 | 1108 |
| 937 | 1104 |
| *932* | 1095 |
| *921* | 1073 |
| 915-16 | 1065 |
| 910 | 1056 |
As always, feel free to send me your comments and
questions.