Now That Was Interesting
Despite the bad economic news, the market
is speaking to us, it wants to go higher. While on the surface it may appear
illogical, we are not paid as traders to read too much into things, just let the
charts guide you. Granted the charts intraday are psychotic, but the longer-term
charts definitely are bullish.
With regard to psychotic charts, take a look at the chart below. It is the
one-minute S&P chart after the release of the PMI
numbers at 10:00 AM EST.
Ironically enough, this move off the pivot number offered me my best and one
of three trades all day. Now I know what you are asking,
“Why were you buying down there? The
S&Ps were in a downtrend.”
Correct, however, after the release of economic data, the market tends to
trade rather emotionally, and some of the standard rules that you live by 99% of
the time get thrown out the window. The only technical evidence for a purchase
was the pivot number. Typically there is some sort of a retracement off a big
spike down like that. However, I never expected a 10 point shot straight to
another pivot number, 898. Thank the trading gods for that trade.
But this example just goes to show how psychotic this market is. It is truly
a market dictated by one’s “feel” and experience vs. some very structured,
mechanical approach.
The e-mail below from a reader illustrates this:
Dave, I have always been told to
stay away from the first 30 minutes of the market because of the volatility
and reversals, etc. Can you give me an idea what you look for in determining
direction for the first half-hour?It seems that most of my losses come early
in the morning because of these conditions.
There is no specific answer unfortunately. Many of the trades
that I am taking currently have a high degree of feel built into them. Most, of
course, have some technical rationalization behind them, but the “feel” aspect
wins out in terms of execution. For newer traders this is tough to deal
with. You try to implement an approach and you get whacked. The first 30 minutes
are where the most inefficiencies exist: no trend, big orders being done,
etc. With a little experience under your belt, you can see through all that
“noise” and find a nugget or two.
The jobs report has just been released and it appears as
though it has not provided any really clear direction to the markets. Given the
aimless trading lately, this was certainly not welcome. We may need to wait
until the Fed meeting on Tuesday before the markets make their intended
direction known. Hey, its been two weeks, what is another day or two?
The ISM report at 7:00 AM
will probably offer the best potential volatility spike if it comes in
significantly away from the consensus.
Â
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| *916* | 1016 |
| 911 | 1006.50 |
| 901 | 1000 |
| 895 | 993 |
| 886 | 986 |
| 871 | 978 |
| 862 | 966 |
| *854* | Â |
* indicates a level that is more significant.
As always, feel free to send me your comments and
questions. See you in TradersWire.