Report Card Week
The
headline on Friday’s commentary was “Trapdoors
and Volatility Bands,” and that’s exactly what we got in size on Intel
Friday starting right in Instinet. The media set the table with its crisis
alarms and early morning hype. The OTC momentum stocks were dropped to extreme
levels in Instinet in order to, as I said Friday, make the emotional retail
selling pay a stiff price for their exit.
By just 9:45 a.m., traders
that faded the emotional selling had their best day of the year by far, as the
market makers took the stocks right back up to complete the fleecing of the
lambs. Most of the key OTC momentum stocks dropped immediately to the 1.5 and
2.0 standard deviation bands in the early Instinet trading and that is
opportunity.
A few examples of the
volatility band trading resulting from the Instinet decline are
(
BRCD |
Quote |
Chart |
News |
PowerRating) -13
points in Instinet and +3 7/8 points by 9:45 a.m. and
(
BRCM |
Quote |
Chart |
News |
PowerRating) – 14 1/2
points and only -5/8 by 9:45 a.m. Also in that same time frame,
(
ARBA |
Quote |
Chart |
News |
PowerRating) was
-9 1/4 and then rebounded to only -3 1/4.
For my Las Vegas
presentation of Fading the Open in Volatility Bands next month, I made up a list
of 25 stocks and their prices in Instinet, then at 9:45 a.m., 10:00 a.m., 11:00
a.m., and the 4:00 p.m. closing prices. You will find this list very
interesting.Â
If you didn’t fade any of
these stocks in Instinet or early on, there were numerous chances during the
rally to enter from tight consolidations, such as Slim Jims, in stocks like
(
JNPR |
Quote |
Chart |
News |
PowerRating),
(
AMCC |
Quote |
Chart |
News |
PowerRating) and
(
ARBA |
Quote |
Chart |
News |
PowerRating) just to name a few.
The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating)
was rescued at the 3505 level and rallied 5.6% to close at 3701. This is the
third time in recent action that the NDX 100 has made instant recovery from
precarious situations. The recoveries have been 3.7%, 4% and now the 5.6%. It
appears the Turk was operating in both the S&P 500, which closed at new
intraday highs after its familiar last-hour rush, and also the NDX 100.Â
The S&P 500 is back at
its 200-day of 1446.66 pivot point and closed at the top of its range on a
wide-range bar. The intraday low was 1421.88 and it closed at 1448.72 vs. an
intraday high of 1449.41. This is
an excellent pivot to launch a quarter-ending rally and get the S&P 500 in
the positive column for the nine-month period. The index is -1.4% YTD.
We should continue to
emphasize the high relative strength stocks that are overweighted by the
Generals, because they are obviously the stocks they will push higher into the
end of the quarter. Also, it appears to me, as I said before, that the fix is in
through Election, and I believe any near-meltdown will be rescued. They might
allow some minor pain, but nothing more.
face=”arial, helvetica”>(December Futures) | ||
Fair | size=2>Buy | size=2>Sell |
19.60 | 20.80 | 18.40 |
Pattern
Setups
Because of the wide-range-bar rallies
in the momentum stocks, look for pullback entries on your five-minute charts and
second entries above Friday’s high. If you take the first entry, make it
small.Â
Stocks that set up are:
(
BRCM |
Quote |
Chart |
News |
PowerRating),
(
BRCD |
Quote |
Chart |
News |
PowerRating),
(
ARBA |
Quote |
Chart |
News |
PowerRating),
(
NEWP |
Quote |
Chart |
News |
PowerRating),
(
CIEN |
Quote |
Chart |
News |
PowerRating),
(
JNPR |
Quote |
Chart |
News |
PowerRating),
(
NTAP |
Quote |
Chart |
News |
PowerRating),
(
SEBL |
Quote |
Chart |
News |
PowerRating),
(
VRSN |
Quote |
Chart |
News |
PowerRating),
(
AMCC |
Quote |
Chart |
News |
PowerRating),
(
ABGX |
Quote |
Chart |
News |
PowerRating),
(
MEDI |
Quote |
Chart |
News |
PowerRating),
(
GLW |
Quote |
Chart |
News |
PowerRating),
(
NTRS |
Quote |
Chart |
News |
PowerRating),
(
COF |
Quote |
Chart |
News |
PowerRating),
(
AIG |
Quote |
Chart |
News |
PowerRating),
(
SANM |
Quote |
Chart |
News |
PowerRating),
(
CMVT |
Quote |
Chart |
News |
PowerRating),
(
QLGC |
Quote |
Chart |
News |
PowerRating) and
(
SUNW |
Quote |
Chart |
News |
PowerRating).
Have a good trading day. Right now as
I look, we have the futures up 6 points so it looks like we’re going to get out
of the box fairly quickly.
Â
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