Roller Coaster Ride
The roller
coaster ride was back in full force yet again
yesterday. Many setups on multiple time frames were evident — I trust you
capitalized on them. In terms of the S&Ps, they respected some key support and
levels, which offered the nimble trader the ability to close out good shorts or
establish longs as 1084, yesterday’s KTN, held like a rock.
The Consumer
Finance stocks I highlighted yesterday also performed well on the
short side once the support levels were broken. The nice thing about those
trades was that nearly every stock in that sector had the same identical chart
on an hourly time frame. Going short just 2-3 of them when support was broken
was good for a couple of points on each stock (roughly 5% or more). Not a bad
way to start the day.
What was critical however, was to not fall in love with the positions. There is
an old saying: "When you are yelling you should be selling, and when you are
crying you should be buying." (Reverse the order for short sales.) It is pretty
uncanny in how it proves true. Just when you think you have the best short
position known to mankind, the market throws you a curve ball. Yesterday, that
curve ball was major support on the S&Ps, 1084 (see charts below). You can
always re-establish your positions, maximum efficiency is far more important
than being proved right. As a result, I covered down there.
The fact that the S&P’s have held that
critical level (refer to Friday’s column)
twice now is somewhat bullish, however, any break of that level will offer
traders some great trades to the short side. We will just need to wait and see.
The scalping scene (which I will now
refer to as High Velocity Trading, HVT) was
quite good as the nervousness surrounding earnings and accounting continued to
be forefront. Stocks like Tyco, Elan and IBM were
noticeable standouts.
Turning to what may drive the market
today, the futures are off their lows as Cisco has indicated that their earnings
and sales are looking good. I have yet to see the details of the announcement,
but it appears as though the "Spin" department has been working overtime.
Nonetheless, it was enough to get the futures off the lows, 5 points clear of
1084.
Key Technical
Numbers:
S&Ps |
Nasdaq |
| 1130-31 (confluence) | 1518 |
| 1114 | 1504 |
|
1099-1102 |
1490 |
| 1090 | 1486 (critical support) |
| 1084 (very key) | 1473 |
| 1080 | 1452 |
| 1070.4 | 1445 |
| 1061 (confluence and critical support) |
1425 (critical support) |
| 1037 (critical support) | 1400 |
As always, feel
free to send me your comments and questions. See you in TradersWire.