The Chop Returns
For
the remainder of the week, one of my long-time colleagues, Bo Harvey,
will be writing the morning
commentary. Bo has traded with me for the last two
years and has developed into a very consistent trader. I trust that
Bo’s unique perspective on
the market will prove to be helpful to you each trading
day. I
will resume my commentary on Monday morning.
Yesterday’s
action was a yawner for most of the day, with the exception of a few
good moves in select stocks in the early AM as well as a quick move down off the
release of the Philly Fed number at 12:00 EST. The
fact that the number was way, way lower than the expected consensus didn’t
seem to faze the market much. This is
pretty bullish, but most of the momentum from the up move has slowed.
It looks as though it may take some sideways action for the market to
digest the recent run.
In
terms of specific stocks, [GS|GS],
[MWD|MWD],
[C|]
and [JPM|JPM]
were briefly slammed in the late morning due to some news, but they recovered
most of their losses by the end of the day. [GE|GE]
was trading pretty well early on, with decent range.
[WMT|]
continued to be a bull, and closed smack dab on its 200-day average.
I suspect this will slow WMT
down a bit today.
The
SOX
struggled with 332 yesterday and has
more resistance in the 340-345 zone.
The VIX
was clocked and will likely continue its decline, with small pockets of intraday
volatility thrown in.
The
gold stocks had a nice little run, with the leader [NEM|]
closing above resistance. Some of the
other gold stocks are still under key resistance, though, so it is a rather
dicey as to which way they will take them the next few days.
Today
may well turn out to be another sleeper day, such as yesterday, that does not
offer many setups that meet my criteria. During
these days I will generally do one or more of the following three things in
order to adjust to the lack of volatility:
-
Cut
back on my trading frequency by being more selective in placing trades.
If the setup does not offer me a
very clear advantage by obviously meeting criteria, I’ll be less likely to
take it. This includes being more
selective about trading breakouts, since lack of follow through in choppy
markets will only reduce my risk/reward.
-
Reduce
my share size and lengthen my holding period, in essence trading from a
five- or 15-minute time frame. Of
course, the setup will still have to meet selected criteria as well.Turn
off my monitors and hit the beach.
Remember,
as a trader there is no shame in simply not taking trades that do not offer you
an advantage. Keep in mind it is options expiration, and that under certain
circumstances the best trade is no trade.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 980 (key) | 1020 (key) |
| 954 | 996 |
| 942 (key) | 989 |
| 935 | 977 |
| 923 | 972 |
| 911 | 970 |
| 908 | 948 |
| 898 | 932 |
Bo Harvey