Look Where Everyone Else Is Not
What started out to be a relatively quiet day
turned into a decent session in the afternoon. Quite surprising ahead of the FOMC
meeting. The one note I found interesting coming into today’s session from a
news standpoint was Merrill Lynch’s rather upbeat revision of GDP which
indicated first quarter annualized growth of 5%-6% for the year. OK, got that,
but the second piece I found quite odd: they downgraded the consumer cyclicals.
Now maybe they downgraded them based on their recent run-up. Nonetheless, if the
economy is going to start growing at those rates, it won’t happen without the
consumer, so needless to say I was puzzled by their observations. No surprise
there, though, since these brokerage firms rarely get anything right. Their
comments did allow our group to play the retailers successfully on the downside.
So even though their research is a bit suspect, you can identify good trading
opportunities from it.
Keeping with the Merrill Lynch upgrade on GDP, I saw this from General
Electric
(
GE |
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PowerRating) on the wire yesterday. It went as follows: they
expected to beat the earnings target in 2002 "if there was a
recovery." If there was a recovery? So who is telling the truth here, GE or
Alan Greenspan.? A rebuild in extremely depleted inventories is far different
than a full-blown sustainable recovery.
I apologize for being a bit negative. Although I could easily argue that
these are purely facts, I just like to always look where everyone else is not.
Many times that is where the best opportunities are found.
As I have been mentioning lately, until the current range in the indices is
broken, the volatility is a bit muted, and as a result "story stocks"
seem to offer an alternative for nice intraday (HVT) moves. I mentioned that Merck
(
MRK |
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PowerRating) and Cryolife
(
CRY |
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PowerRating) were active
on Friday, and yesterday some news on Qwest
(
Q |
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PowerRating)
came through to save the day as well. While I suspect that the passing of the FOMC
meeting will allow the overall market to pick a direction soon, the wire can
keep you active until it does so.
On the intermediate front, gold stocks offered some nice moves intraday,
mainly off setups on the hourly charts. The gold stocks have been dead for a
couple of weeks now, but prior to that offered many excellent setups intraday as
well as multi-day. I am focused on this group for further indications of a
continuation. Keep an eye on Gold Fields
(
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PowerRating) and Newmont Mining
(
NEM |
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PowerRating).
Like most recent FOMC meetings, I plan to stick to the sidelines just after
the release unless there is some unexpected change in policy, i.e. a sudden rate
rise or cut. The moves that follow a priced-in bias will be the ones that offer
the better setups. So be patient, and don’t get sucked into the
"noise" just before the announcement at 2:15 p.m. EST.
The IBM column I said would be ready for today is not. I was not able to
complete it in its entirety, but hope to have it ready for tomorrow.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 1205.6 | 1597 |
| 1194.46 | 1585 |
| 1188.4 | 1566 |
| 1178.5 (key resistance) | 1549-51 (confluence) |
| 1167-71 | 1530 |
| 1160 | 1521 (confluence) |
| 1153-54 (confluence) | 1505-06 (confluence) |
| 1142-43 | 1491-94 |
| 1137 (key support) | 1485 |
| 1131 (confluence) | 1476 |
| 1460 (key support) |
With just over a month to go before the launch of Single
Stock Futures (SSFs), I will be starting a four-part series beginning
on March 22, the first of which will address the following:
Section 1: Why I will be trading SSFs.
The introduction of SSFs will be a very exciting time for traders. They will
not only offer a new avenue for traders, but more importantly, offer a nice
complement to what many traders, including myself, already do.
As always, feel free to send me your comments and
questions. See you in TradersWire.