Jump Start
Another wild
roller coaster ride once again offered several great setups during
the morning, before moving sideways at mid-morning, just above the September
contract lows. The stocks which offered the most bang were
Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating) from an HVT
standpoint and United Health Care
(
UNH |
Quote |
Chart |
News |
PowerRating)
(see
yesterday’s column) from a position standpoint. UNH
offered you nearly 3 points to the downside, I trust you were paying attention
and captured this one.
The mid-morning bid in the S&Ps and
Nasdaq also offered a nice long entry on Mercury
Interactive
(
MERQ |
Quote |
Chart |
News |
PowerRating) at $21, which was pointed out in
TradersWire, this trade was good for .60 cents. There was another long entry
point at 21.60 which also had a nice pop. Both of these trades coincided with a
test of the contract lows on the S&Ps (+/- 945).
These are the type of non-HVT trades
that offer very low risk entries. I chose MERQ
on the first trade for one simple reason: It was sitting on support during the
whole down move and began to form a Slim Jim on the 5-minute chart shortly
thereafter. The breakout of the Slim Jim occurred with the rally of the
futures. Go back and look at a 5-minute chart of MERQ
and the S&P futures from yesterday, you will clearly see the setups. Pay close
attention to these times: 12:10 EST and 1:15 EST.
As I mentioned in
Monday’s column, I
expect after the first hour of trading the trading desks and exchange floors
will witness a sizable exodus in order to get a jump start on the weekend. Under
these circumstances, the liquidity just dries up. And while that can produce
some pretty radical price action, you run the risk of being the last guy
standing with no chairs in sight when the music stops. Not the type of
risk/reward I am looking for.
So what is the game plan? Trade
assertively in the first hour and wrap it up. Sure this is not much advice, but
under the circumstances it is not a day I do a lot of prep work for or plan to
trade. You are better off re-charging the batteries, so to speak.
Key
Technical Numbers: (futures)
S&Ps |
Nasdaq |
| 969 | 1014 |
| 961 | 995 |
| 956 | 980 |
| 946 | 966 |
| 935 | 952 |
| 927 | 939 |
| 908 |
All the best to you and your families
for the holiday weekend. I will be back on Monday, for what is sure to be a
continuation of a very exciting and tradable market.