The Market Is Making One Thing Clear
The steady grind higher, an ideal day for
portfolio-oriented investors, but not exactly the type of tear ’em up price
action that short-term traders favor. There never seems to be a pullback that is
deep enough, and naturally, with no pullback, years in front of the screens has
taught us that those are typically not high-probability trades. Days like
yesterday makes those rules look pathetic. There was not much you could do
except for the position trades I had mentioned in yesterday’s column. These
subtle additions to your daily trading plan not only “save” a day like
yesterday, but also give you that extra total return even on days where there
are multiple setups from an HVT standpoint.
I received an e-mail from a reader who asked,
“This market is a yawn, how do you
remain focused?”
Simple, I do not focus, I simply do something else. Each trader needs to
recognize what type of trading environment is conducive for their style of
trading. After the first hour yesterday, it was clear it was going to be a grind
higher. By sitting there staring at the screens, you only set yourself up for
taking marginal trades. How many “breakouts” or shorts did you attempt yesterday
that left you with ZERO to show for it? Quite a few I would bet. I suspect that
today will be a day that offers me more. Rarely do you have two grind up/down
days in a row.
One thing is for sure. The markets have made it very clear that they are
seeking higher ground, at least in the near-term. Two key levels were breached
without much of a fight yesterday, 911 and 921.
I hope that most of you took advantage of the setup in
Altera
(
ALTR |
Quote |
Chart |
News |
PowerRating). When all was said and done, it posted about 4%
to my account. The position is still open. While the market may pull back, I
expect it to be more of a rest rather than the start of a meaningful downturn.
On a side note, I covered all my shorts in my non-trading accounts yesterday
and am now long only one position, ALTR. For
me, while I recognize that the market is set up for a nice rally, my bias is
still to the short side, and I am not comfortable getting too long the market in
here.
Unfortunately, the three stocks I highlighted for intraday longs did
absolutely nothing. I apologize for those lame picks.
The market has come a long way really fast, a pullback, you say, is
inevitable, perhaps, but go back and review the previous bear market rallies,
August 2002, post 9/11, and October 2002. All were sharp and quick. Most people
want to be bullish, and given a hint that they may be possible, the rally can
feed on itself. Always factor crowd psychology into your trades. It is subtle,
and it takes some time to implement it properly, but when you do, it pays off
nicely.
| Intraday Setups | |
| Â | |
Stock |
Action |
| MCO | Long |
OVTI |
Long |
| ZMH | Long |
| GDT | Short |
Â
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 954 | 1090 |
| 939 | 1076-78 |
| 937 | 1068-69 |
| 932 | 1056 |
| 929 | 1048 |
| 920 | 1037-41 |
| 915 | 1017 |
| 909 | Â |
As always, feel free to send me your comments and
questions.