Rangebound

After a banner kickoff to the fall trading session,
it is to be expected that the market will quiet down for a day to digest the
carnage. Yesterday was that day. Other than the first hour of trading,
opportunities for quick scalps were non-existent, or came with a high
risk/reward. Needless to say, my day was officially done at 8:30 a.m. PST. Take
a look at the five-minute chart of the S&P and Nasdaq futures — narrow and
sideways was the operative phrase for the day. If you go back and examine the
one-minute chart of both of these indices, you will also notice that in the
afternoon each pullback or rally was very, very short in duration, less than 3
points on the S&Ps and 5-7 points for the Nasdaq. As we all know, the
futures need at least 3-5 points on the S&Ps and 10+ points on the Nasdaq to
justify entry points and slippage for a “scalp” trade.

In terms of my decision to cover my position in Best Buy
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,
well, what can I say? You can never call them perfectly. However, one never goes
broke taking profits, especially at a key support number like the 200-day moving
average. The 200-day average is 55.92, so this number will continue to dictate
direction in coming sessions and should offer some good intraday and longer-term
setups. While Best Buy is not a good “scalping” stock, it does offer
plenty on intraday range, making it ideal for trades on a five- to 15-minute
time frame.

Going into today’s session, it appears as though the S&Ps will manage to
hold above the 1100 level as they head into the opening. This will be welcome
after yesterday’s rangebound afternoon. I will be trading aggressively on
decisive moves above 1100 or below 1086. Goldman Sachs
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and United
Healthcare

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are being touted by analysts today, so be cautious, or
better yet, avoid intraday trades with these stocks. The release of fundamental
news such as this changes the overall character of the stock and makes it more
difficult to trade. Several trading stocks should offer good setups if they
break out of their range from yesterday. These include:

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,
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,
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and 
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.

Key Technical Numbers: (futures)

S&Ps  Nasdaq
1130-33   1430
1118-20  1412.83
1107 (confluence) 1400
1096-97 1391
1087.23 1375
1081-82 1358
1076 1350
1073 (contract low)      1340 (contract low)

With only three weeks until TM 2001, I am putting the final touches on
my presentation. Not only is it a big task, it also makes me very aware of how
subjective my approach to intraday trading is. The mechanics of the system are
quite simple and will be discussed at length at TM 2001, but the timing of
entries is easier explained in conversation and questions than paper and ink. I
look forward to meeting everyone who has already signed up and encourage those
of you who have not. With an impressive lineup of some of the industry’s best
traders, the only place to be on the first weekend in October is Las Vegas.

Have a great trading day. Feel free to send me your comments and questions.
My thoughts go out to those involved with the terrible situation at the World
Trade Center in NYC.

Dave

P.S. I’m looking
forward to sharing the nuts and bolts of how I trade at TM2001 in early October. You’ll learn the two big keys to my trading: 1) How to
define a powerful intraday trend;
and 2) The precise
parameters that tell you where to enter your trade in the midst of that
trend.
I will also explain to you the “feel and rhythm”
that enables me to trade with consistency. This is one element of my
trading that I could never convey on paper through a set of rules or a
formula. You’ll just have to meet me in Las Vegas, and you’ll know what I mean!