No Sense Of Panic
Another down day, yet again I sensed no panic
selling. The move down was orderly, lacking the quick volatility
spikes that we daytraders (HVT) relish. It was yet another day where money could
be made, it just needed to come from a longer time frame. My approach was trades
off the 5, 15 and hourly charts.
Gold stocks remained active to the upside. In fact, Gold
Fields
(
GOLD |
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PowerRating) and Harmony Gold
(
HGMCY |
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PowerRating), the two that I follow and trade closely, are up over 19% and 17%
respectively in the last two trading days alone. Man, this is eerily reminiscent
of the Internet bubble! Obviously, the big difference is that gold, the metal,
and these two stocks actually have value and make profits. As I mentioned in yesterday’s
column, I am both long these stocks as well as trading them when the
activity picks up. From a longer-term perspective, there may be a real case for
these stocks. Nonetheless, with the recent run-up, some sort of consolidation or
pullback may be just around the corner. However, any negative developments in
the financial markets, and it appears that’s where the money will be heading.
Turning back to the indices, what can I say? they are showing some serious
signs of deterioration here. However, the S&Ps closed right at their 40%
retracement off the February low and March high. This is encouraging.
The same cannot be said for the Nasdaq. The abundance of grossly inflated
tech stocks will just not permit this index to gain any ground. It continues to
lag. In fact, the Nasdaq just narrowly closed above its 60% retracement of the
same February low/March high. A re-test of the February low is not out of the
question.
Meanwhile the SOX closed below its 50% retracement of the same time frame.
And that was on the heels of more analysts raising their price targets for these
stocks. Perhaps the investing public is coming to terms with some of the
so-called "research" that comes from these firms.
So how will I be playing the market today? Unless the volatility comes back,
I will continue looking for slightly longer-term setups.
J P Morgan
(
JPM |
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PowerRating), based on the hourly
chart, looks to be setting up on the short side if it breaks $35, but beware of
some minor support at $34.21.
Keeping with theme of the deterioration in tech stocks, I need to point
out Intel
(
INTC |
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PowerRating). Intel has some
potential short setups intraday, or even a bit longer below $29.70 as well as
$27.93.
IBM
(
IBM |
Quote |
Chart |
News |
PowerRating) has dual potential at
$103.24. Given that the market has been down for four days in a row, we are
obviously due for some sort of bounce. Bounce or heading lower, IBM should offer
some nice setups at that level.
For those of you who did not absorb yourself in the recent release of the
FOMC minutes, I congratulate you on pursuing more exciting extra-curricular
activities. Luckily, the Financial Times and Bill Fleckenstein
were kind enough to give us the summary, which I found rather interesting. The
following quote is from Mr. Fleckenstein’s column, with the single quotation
marks indicating a reference to the Financial Times article.
"’The Fed Considered Emergency Measures to Save the Economy.’"
During the just-released minutes of its Jan. 25-26 meeting, it appears that
the Fed contemplated using a variety of ‘unconventional’ emergency measures,
including buying stocks, if cutting rates was insufficient to stop a U.S.
recession.The story quotes a senior Fed official who was present at the meeting as
saying that an example of the ‘unconventional means’ would be ‘buying U.S.
equities,’ as well as other ‘possible measures.’ This unnamed official also
said that the Fed ‘could theoretically buy anything to pump money into the
system,’ including ‘state and local debt, real estate and gold mines, any
asset.’"
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 1155-56 | 1496 |
| 1144-45 | 1485-87 (key resistance) |
| 1134-36 (key) | 1477 |
| 1126-28 | 1460 (key) |
| 1116 (critical support) | 1443 |
| 1107-09 | 1436 (critical support) |
| 1099 | 1416 |
| 1387 | |
| 1370 |
Given that my time frame has been pushed out a bit on my trades, I am not
feverishly banging on the keyboard, so I will do my best to share with you some
of my observations in TradersWire.
As always, feel free to send me your comments and questions.