Opportunities Are Evident

November 14, 2001
Dave Floyd

Yesterday’s
narrow-range move higher continued to force
traders to be patient, as quick, decisive
moves were nowhere to be found. It appears as though the market is heading to
higher levels under very cautious terms — almost reluctant buying. Nonetheless,
opportunities are evident, you just need to extend your time frame a bit to take
advantage of the moves.

I received an e-mail from a reader who
summed up what many of my colleagues have been echoing lately:

Dave, I wanted to
get your thoughts on the trading environment lately. I am finding that stocks
are whipsawing fiercely ,
dropping .10 + and then reversing. Also, they are trending down and make such
sudden wide-range moves
so that if you’re not in the stock already, you can’t catch the move. Check
out
(
INTC |
Quote |
Chart |
News |
PowerRating). Is this what you are seeing
also or am I missing something? Would appreciate your insight. Thank you.

There have been several occasions
where stocks will just trade opposite the futures, while it is very frustrating,
it may be viewed as a sign that a short-term trend change is imminent. The
market has been trending higher since the re-opening after Sept. 11, and while I
am not saying the market will reverse and head lower, it just feels as though it
is a bit tired and you have no real conviction by market participants on either
the buy or sell side.

My suggestion is to find your entry
and exit points off of a 3- or 5-minute chart to avoid the
“whipsawing” which is becoming commonplace.