Shifting Gears, Again
This market
has traders reaching for their best stuff day in and day out.
Yesterday’s “inside” day kept us trading off of 5-minute bars as the
one-minute charts continued to be quite sluggish. Despite a narrow day, there
were some good setups.
Today’s unemployment number may have
an effect on the market, but with all the recent economic news showing some
“bright spots,” unless this number is a bomb (which it just did), the
market will probably continue its upward climb. The term “bright
spots” is debatable simply from how you would define “bright.”
The better description is “things are less gloomy.” Old habits die
hard, whether or not they do is irrelevant while trading, as long as the market
offers some sort of a range intraday, traders will be able to capitalize.
Getting back to yesterday’s setups,
they were all based off of 5-minute bars. Even on the 5-minute bars, the best
trades are found in the opening hour as liquidity and volatility are at their
best. Consider the trade in Fannie Mae
(
FNM |
Quote |
Chart |
News |
PowerRating), the concept is the same
as it is on 1-minute bars, you just have to deal with a bit more
“noise” and give the trade a chance to work itself out. Cut your share
size in half if the “noise” is testing your resolve. It is tough to
transition from pure scalping to a slightly longer time frame, but given the
nature of the markets, especially now, you will always need to make adjustments.
Five-minute
chart of Fannie Mae (FNM), Thursday 12/6/01
The second example came from a stock I
highlighted in Wednesday’s
column, Alliant Tech Systems
(
ATK |
Quote |
Chart |
News |
PowerRating). The daily chart was
exhibiting some very negative technicals. Those of you who took the trade offÂ
Wednesday’s opening are in good shape as of today’s close. The one level I
thought would be key and would lead to a sharp, if broken, drop was 74.50 (refer
to Wednesday’s article). Perhaps some of you kept that number in mind while
trading yesterday so you could take advantage of the lay-up .80-.90 move
straight up to the 20-period moving average on one nice big 5-minute bar. Know
your levels for the lay-up trades. It is always nice when you have the ability
to trade around your longer term positions.
Five-minute
chart of Alliant Tech Systems (ATK), Thursday 12/6/01
Key
Technical Numbers
S&Ps  |
NASDAQ |
1183-85Â Â Â Â |
1756 |
1172.30Â Â Â Â |
1740 |
1164 (very key)Â Â Â Â |
1721 |
1162Â |
1710 |
1153 (confluence)Â Â |
1693 |
1143.27Â |
1670 |
1131 | 1645 |
1121 (confluence)Â |
1623 (confluence) |
As always, feel free to send me your
comments and questions. See you in TradersWire
and have a great weekend.
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