Never Thought I’d See The Day
Gap and Crap? On a down day? Yes, I never thought I would see the day. But
given the nature of the markets, it should not be a surprise. Many will fondly
recall back in the roaring bull days of the late ’90s (don’t get all misty eyed)
when G&C’s were very common on the heels of economic news or earnings. Well,
now we have The Costanza Market, so now we
get G&C’s on bad news. Unlike the old days, gap downs are not nearly as much
fun to buy. So yesterday, after the first half-hour, there was not much to do.
The institutions were non-existent in the S&P pit, resulting in rangebound
trading. It was the best example I have seen in recent sessions of going for the
throat early to avoid having done nothing by waiting for that
"perfect" setup. If you were thinking, you were not making any money.
Luckily, by the afternoon that had all changed, as decent price action came
roaring back.
Overall, I think trading has been pretty darn good over the last couple of
weeks. This is surprising given that we are heading into summer. However, as we
all know, the market always does the opposite of what you think. I remember
dreading the approach of summer in 1998 only to be handed some of the best
trading ever courtesy of the good boys at Long Term Capital Management and the
financial chaos that followed. With all the uncertainty swirling around
currently, I would not be surprised to see an active summer.
The gold stocks appear to be losing their (pardon the pun) luster. From a
longer-term technical standpoint, they are not setup, and even intraday, the
price action is not what it was. In the last few sessions, I regularly saw the
gold stocks move contra significant S&P moves. This was a great strategy.
However, it now appears that the interest from larger players (traders and
institutions) is just not there. Don’t abandon them yet, however. Like most
things, stocks go through phases. With all the turmoil and uncertainty swirling
around, I suspect it will not be long before they begin trading actively again.
Going into today’s session, the game plan remains the same for me: take full
advantage of this price action. I am assertively buying pullbacks and selling
rallies in two stocks. When trading is good, I am far more effective when the
number of stocks I watch is small. Naturally, there will always be some trades
which break my rules for trading with the trend, but those come by only a couple
of times a day, and only when the risk/reward is greatly in my favor. At 10:00
AM EST we have the release of Leading Indicators,
any significant deviation from the forecast may serve up a nice volatility
spike, resulting in a couple of nice trade setups.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 1040 | 1140 |
| 1032 (confluence) | 1118 |
| 1019 | 1110 |
| 1010-11 | 1104 (key) |
| 995 | 1087 |
| 986 | 1064 |
As always, feel free to send me your comments and
questions. See you in TradersWire.