Know Your Levels
Good morning.
Well, I wish I could report some great setups from yesterday, but I
can’t. There was some good price action
in the morning, while the remainder of the day was quite sloppy.
One observation worth noting was yesterday’s low, 1221.
All traders, especially traders on a very short time frame, need to
recognize key support and resistance levels not only on the stocks they are
trading, but also on the futures. Anyone
who knew why we held that level (50% retracement of the March — May High/Low)
and then went long on a stock with a similar intraday chart —
(
TXN |
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News |
PowerRating),
(
MWD |
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News |
PowerRating),
(
IBM |
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News |
PowerRating),
(
MSFT |
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News |
PowerRating) — pattern profited handsomely.
KNOW YOUR LEVELS!
Note Chart 1.
The patient trader will let the market come back to them and thereby
increase the risk/reward.
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Just when the market appeared
to be holding its own and breaking above some key resistance levels, it gives it
all back on more earning warnings. The
S&Ps are now flirting with the 1200 level as well as key support at 1196.
A break of 1196 could set the stage for a move back towards contract lows
at 1110. Resistance is seen at 1216 and
1220. The NASDAQ is hovering just above
1700 with additional support seen at 1673.
Despite getting beat up in the
last few sessions due to the warning from Merck
(
MRK |
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Chart |
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PowerRating), the drug and biotech
sector may benefit from the decline. Stocks
like Baxter
(
BAX |
Quote |
Chart |
News |
PowerRating) have held up well.
Banks and brokers may buck the downtrend intraday if the market senses a
half-point rate cut.
For readers of this column who
participate in the TradersWire, please keep an eye out for my intraday
observations. My screen name will be Dave Floyd.
The TradersWire is an ideal medium to share with you my observations,
given that they change in a matter of minutes. I
will update as often as possible depending on how active trading is.
One thing to keep in mind is that my observations are specific to my
trading style. You will notice that I am
very attentive to the futures even though I am trading the stocks.
The stocks I trade rarely go far without the futures.
So for those of you who are “hyperactive†traders like myself, I
believe you will find my observations helpful.