Signs Of Life
As the market goes into day-nine of drifting near the Equator, many traders are wondering, “Is that all there
is?” Fortunately, there are ways you can keep dancing if you’re a nimble short-term
trader who’s got a unquenchable lust for action.
Let’s use one of Dave Landry’s favorite short-term patterns,
the Trend Knock-out (TKO), as an example. Wednesday morning, before the market
opened, we posted the following in TradersWire:
The Andrew Corp. (ANDW)
has set itself up in a “Trend
Knock-out”, a favorite pattern of TradingMarkets.com’s director of
research, David Landry. This is when the stock sells off in early trading and
takes out at least the prior two lows, but then reverses and closes in the top
of its range. This price action often shakes out the weak hands and clears the
way for the stock to trade higher.
As you can can see in this chart, ANDW would have
given the short-term traders about 2 points on the TKO
pattern, had they had bought at Wednesday’s open.
The principle behind this short-term
pattern is clearly seen in the second bar from the right which shows you
Tuesday’s action. ANDW opened near its highs and pulled back to take out the
previous two days’ lows. This action shook out a lot of weak hands clearing the
way for the stock to trade higher. When ANDW closed near its highs, it suggested
that the remaining traders were confident enough to hold the stock overnight.
The TKO is just one of many
short-term patterns you can use to keep yourself entertained while we wait for
some breeze to hit the market’s sails.
See you tomorrow,
Eddie