The Lemming Mentality
If you trade the markets long enough, you
think you have seen just about everything. Well, let’s just say there was one
other thing. The reversal in the futures overnight is certainly a bit
confounding given the news from Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating).
Naturally, I am not in the business of predicting where the market goes day to
day, but I had been anticipating a bit of “fear induced” trading on
the back of that earnings report. As of 5:15 AM PST, it appears that this will
not be the case.
The cause for the reversal? Without knowing exactly, it appears as though Merrill
Lynch
(
MER |
Quote |
Chart |
News |
PowerRating) came out with some very positive comments on MSFT.
This is clear evidence of the lemming mentality that still exists in the market
place as well as the sound-bite investment analysis. But I won’t go there.
Nonetheless, the S&Ps now find themselves right back in the middle of
this frustrating trading range. With options expiration in full force today, I
am less than enthusiastic about the prospects for a good trading session.
Overall, it has not been a bad trading week here on our desk. I believe the key
has been to be very disciplined about stepping aside after the first hour and
only taking trades with reasonable setups. I myself have only made a handful of
trades (less than six) in the afternoon sessions this week. The volatility is
crammed into one hour for a whole day. Boy, what a difference a year makes.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 1145-46 | 1459-60 |
| 1136 | 1449 |
| 1126 | 1436 (key resistance) |
| 1116 (confluence) | 1416 |
| 1107-08 | 1400 |
| 1098 | 1386 |
| 1363-66 |
Â
| SOX KTNs |
| 604-05 |
| 593-94 |
| 589 |
| 582 |
| 573-76 |
Next week the last piece of the four-part series on Single
Stock Futures (SSFs) will appear. This installment will discuss some
of the strategies I plan to employ. These products have suddenly opened up
several more approaches that will not only complement my existing style, but
also offer a few stand-alone strategies. Click
here to see the first 3 installments.
As always, feel free to send me your comments and
questions. See you in TradersWire.