Sardine Tight
Call this morning one of
reflection as the Qs have been quite
range-bound (we’re talking sardine tight) as we approach midday. I say
reflection because in addition to the tight early range, we have several
conflicting indicators which has me in a bit of a "watch" mode until
the market provides additional information over the coming hours and days.
What are the conflicts? Well, in the bullish camp
we have continued testing of weekly 15-MA support and an hourly chart that
continues to tease us with oversold indications which has led to several
mini-rallies which, while scalpable, have fizzled on the approach to daily
resistance. In the bearish camp, we have the aforementioned testing of daily 15-MA
resistance as well as volatility indices that are arguably screaming
complacency. Combine all of this with Bollinger Bands that are tightening on
multiple time frames and we have all the makings for a strong longer-term break,
the direction of which the market should provide soon.
Monday January 28,
2002 11:15 AM EDT
Keep in mind if
you’re trading intraday range breaks, try to avoid taking break attempts when
the stochastics on your traded time frame are at extremes. Otherwise, you’ll
find yourself buying highs and/or shorting lows and risk running out of capital
and confidence before the ultimate break occurs.
If you were to ask me what my ideal longer-term setup might be over the next few
days, it would be a further extension of the daily downtrend south, followed by
price vs. stochastic strength divergence on the same time frame and a trend
reversal to the upside, all while keeping the weekly uptrend intact. Why do I
even suggest such a scenario? Heck, when your football team is on a roll and
shocking the world, you might as well ask for the moon.* In all
seriousness, such a setup would certainly be nice, yet we’ll of course trade
what the market provides.
Good Trading!
*Please don’t ask me about
next week’s 12-14 point spread … I still can’t figure that one out.