Making Headway

Despite the
widely expected rate cut
, the major indices managed to make some
headway to the upside in yesterday afternoon’s session. The period immediately
following the announcement offered little to no trading opportunity as it
appeared the news was being digested. However, the last hour saw the bulls out
in force. Intraday traders who were aware of the KTNs
highlighted in my column yesterday,
probably managed to navigate the session well. See chart below. As of 5:30 AM
PST, it appears as though the market will give everything back on the opening,
assuming nothing major happens in the next hour.

A key economic number at 7 AM PST may
provide for some quick volatility spikes for nimble traders, NAPM
(non-mfg), a reading below 50 indicates contraction in the economy. Consensus
estimates are at 46. This number will be relevant since it is measuring
September data, and should reflect the WTC incident.

I receive emails frequently which
state: "How does one use a longer term perspective in their daytrading?" The answer: You don’t. Your mind needs to be able to switch
between the two. There is a big difference between trading and investing.
Daytrading requires little opinion, the time frame on which you trade does not
allow for opinions to play out. That being said, it is very important to
maintain some sort of opinion on the economy and market so that one may
effectively manage their portfolio. 

Most of you know that I am somewhat
bearish on the market, and my portfolio reflects this. The following link is to
an interview with Sir John Templeton. Take the time to read and think about it
as it relates to your current approach to investing.  There are still too
many people out there who are confusing a large drop in the market with value.

Technical Numbers



1060 (20-day moving
1055  1151
1049 1141
1029 1112

My column tomorrow will only have the KTNs,
and there will be no column on Friday since I will be traveling to TM2001.
I look forward to meeting with those of you who plan to attend. 

As always, feel free to send me your
comments and questions.