The Most Bang
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
market’s opening. Therefore, overnight events may alter the
outcome of these observations.
On
Wednesday, the Nasdaq gapped lower but quickly found low (a). Then, after
futzing around, blasted on the Fed news. It appears that they wanted the most
bang for their buck–cutting in-between meetings, 1/2-point, and in the middle
of the trading day. Judging from the largest one-day point and percentage move
in history, it looks like they got their money’s worth. This action has it
closing on its high (b).
Now what? Based on my
ties with the hedge fund community, I know that there are a lot of large traders
with derivatives in the stock and bond markets that were caught off guard on
Wednesday. These positions will have to be unwound. This will likely keep the
volatility high in the interim. Therefore, the best advice I could give would be
to use caution, trade your setups, wait for entries, use stops, trail your
stops/take partial profits and most of all, keep a level head and avoid getting
too caught up in the euphoria. Swing trading is a game of inches with an occasional
home run. Getting careless on just one trade can erase many winners.
Looking to potential setups,
the obvious play would be financial and interest sensitive issues.
In such a strong market, I’d
avoid those stocks that were up sharply and focus mostly on stocks in pullbacks.
With that said, the following stocks are on tonight’s Pullbacks
Off Highs List
Eastman Chemical
(
EMN |
Quote |
Chart |
News |
PowerRating) looks
poised to rally out of a three-bar pullback.
Dow Chemical
(
DOW |
Quote |
Chart |
News |
PowerRating) looks
like it has the potential to rally out of high-level cup-and-handle-ish
formation.
Fidelity National Financial
(
FNF |
Quote |
Chart |
News |
PowerRating) formed a bullish
outside day on Wednesday.
Bisys Group
(
BSYS |
Quote |
Chart |
News |
PowerRating), a quasi financial, looks poised to
rally out of a simple pullback from highs.
Best
of luck with your trading on Thursday!
P.S. Reminder:
Protective stops on every trade!
Book ships
this week! You can still take advantage of the pre-publication discount of 20%
up until the actual ship date. 30-day money back guarantee no questions asked.