The Daytrader’s Dilemma
Thursday’s
session started off OK but the afternoon offered very few good
setups, volume tapered off and follow through was almost non-existent.
The good money was made in the morning. The
good news was the NASDAQ closed above key resistance levels and may now set the
stage for higher ground. The S&Ps
could not manage a close above 1250, but are within striking distance.(
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PowerRating) announcement that sales have slowed may put pressure
on the market though.
One disappointing thing for
traders of Morgan Stanley (MWD) was the release of their earnings.
Frankly, I don’t know if they were good or bad and really could care
less since I don’t have it in my longer-term portfolio.
What is disappointing is that any time fundamental news like earnings or
an analyst upgrade/downgrade is announced, it changes the way a stock trades
intraday. Since I have been trading MWD
consistently for a few weeks now, I missed out on some nice moves in the market.
The charts below will highlight “The Daytrader’s Dilemma.”
One note:Â Longer-term
traders who use different indicators to gauge entry and exit points may have
found MWD to be a fabulous trade.
Notice on the S&P chart how
many up and down waves occurred in the first hour of trading as noted by letters
A-F. I see five potential setups.
The MWD chart for the same time frame offers no “ideal†entry point,
it simply ground higher.The point here is simple:Â
If you are a hyperactive day trader, STAY AWAY from stocks with
fundamental news, at least for the morning session.Looking at today’s levels for
the S&Ps and NASDAQ, the S&Ps need to get above 1250 and have
support at 1242 and 1239. A move
above 1250 should set the stage for a run to 1259.
The NASDAQ will see if it can
hold onto the elusive 1758 level. If
it can sustain that level, look for a test of 1795.Â
Minor support is seen at 1754.
The afternoon sessions this
week have been “thin†and difficult to trade, given that it is Friday, be
careful not to overtrade if in fact volume dries up. Seize the opportunities in the morning and be patient. Next
week’s Fed meeting will provide plenty of trading opportunities, so
don’t be afraid to start the weekend early if the market slows.
Have a good weekend.