Shocked Dinner Guests Find Salad Fork Misplaced
Well,
despite what most would have expected after the
Fourth of July holiday, the market came roaring back with a vengeance. So what
to make of it? Bulls will tell you it signifies a bounce from severely oversold
conditions. Bears will tell you with so little participation in the market it
could literally be “bid up on nothing.”Â
Regardless, it does not matter who is
right.Â
The big rally now sets the stage for
yet another stand-off between both sides, which will undoubtedly will result in
some good trading. We will just have to see how the week unfolds. My two cents,
for what it is worth, is that the momentum will stay to the upside. PsychologyÂ
and pessimism are pretty damn low, and many stocks are forming nice bottoming
formations, so I will stick my neck out here and say that we may make up some
lost ground this week, until some other negative news story hits the tape, or
Martha Stewart gets arrested for having a salad fork on the wrong side of the
dinner fork. That is exactly the reason the market has been trading so well
lately at least from an HVT standpoint.
Fear, gossip and rumors reign supreme.
And sure enough, not more than a few
hours after completing the article last night, a report is circulating that
Merck
(
MRK |
Quote |
Chart |
News |
PowerRating) may have recognized revenues
before they were received. Naturally, the futures were knocked for a loop after
that, so it appears that the volatility will indeed stick around. Based on that,
the two long trades I mentioned below may deserve more scrutiny depending on how
the futures fare after the opening.
So, the game plan remains the same. I
am trading very assertively on the openings, doubling and tripling average share
size to take full advantage. It is not often when you can take decent money out
of the markets consistently in the Summer with HVT.Â
The remainder of the days have also been good from a position standpoint, with a
few good set-ups coming from the 5 and 15-minute charts. I have been calling
many of these out in TradersWire.
I came across a very nice chart last
night for a longer term play (weeks perhaps months). Take a look at the weekly
chart of United Technologies
(
UTX |
Quote |
Chart |
News |
PowerRating). Currently
it is sitting just above the gap down pre-September 11. I think the stock is
poised to go higher, although I would have a stop-loss set right under the
pre-gap low of 64.86.
Another stock, albeit not nearly as
convincing of a long as UTX, is the daily chart of BEA
Systems (BEAS), a move above 10 should offer a nice entry point on
the long side. The first target would be at the 50-day average, $10.42.
Playing the Brazilian crisis theme
from a fundamental as well as a technical aspect,
Telebras
(
TBH |
Quote |
Chart |
News |
PowerRating) looks vulnerable. Both the hourly and 15 minute
charts are sitting just above support at $20.25, a break of that level alone
would initiate a short position, however, further negative developments on the
economic crisis would only amplify the move down. Given that most of the bad
news is already out, this is meant to be a shorter term trade.
Key Technical Numbers: (futures)
| S&Ps | Nasdaq |
| 1013 | 1076 |
| 1003 | 1057 |
| Â 994 | 1038 |
| Â 982 | 1005-10 |
| Â 975 (confluence) |
 |
| Â 969 | Â |
As always, feel free to send me your
comments and questions. See you in TradersWire.
Dave