The Obvious Thing To Do On The Open
You know, after a while, you just begin to get the
feeling that the longer you stare at the screens, the more the
“layers of the onion” unfold before you. Yesterday for me was the first day in
which the “nuances,” “subtleties” and “gut instincts” began to kick in.
Naturally, I mean this in the sense of playing the market on what I would
consider the new dynamics/terms:Â low volatility and expanded duration.
I know when I first started trading back in 1994, it was the same thing. It
was not until a year or so later that the pieces began to fall into place. Day
after day of staring at the same stocks, same chart setups and same indicators
eventually allows for the light bulb to go on. This time the process was not
really as challenging simply because I have all that experience behind
me. However, it still took a few weeks of looking at the market from a different
perspective to fully appreciate the subtleties common with this type of trading
environment.
I share this with you for one simple reason, perseverance and focus will
always lead to the solution. Shifting gears every other day or week will only
have you chasing your tail. I said this a few weeks ago, and I have begun to see
the fruits by using the same exact setups, but letting the price action play out
a bit longer. It is now obvious that this is the next step in the evolution of a
trader.
Just like the rally which took place at the beginning of the year, the
selloff, too, has come pretty far, pretty fast. Will today offer a decent
rally? I have no idea. However, we are hovering above key support. Nonetheless,
I want to be prepared in the event there is a sharp correction which brings in
voracious bulls and shorts covering. As you surely noticed in the last several
months, these intraday or even multi-day rallies are quick, decisive and
profitable if you have a plan and are not afraid to attack.
For me, the one stock that always stands out as a solid performer is
eBay
(
EBAY |
Quote |
Chart |
News |
PowerRating), both as an investment, but
more importantly as an intraday trader. I do not consider it on the
HVT “field” since I am not a big fan of
Nasdaq stocks for HVT, but for a setup off a
five- or 15-minute chart, this one is a great candidate. The range and liquidity
is excellent.
Naturally, the obvious thing to do on the opening is too look to fade the gap
opening. This of course is meant to be a quick trade, given that the trend can
and many times will continue. We are overdue for a move higher. However, pay
close attention to the price action on the way up. I expect it to be pretty
sloppy, in fact, it will probably offer a great opportunity to add to shorts
and/or establish new ones based on five- and 15-minute charts. As usual, I will
be watching stocks like
(
TYC |
Quote |
Chart |
News |
PowerRating),
(
HPQ |
Quote |
Chart |
News |
PowerRating),
(
MWD |
Quote |
Chart |
News |
PowerRating).
For those of you who may not have had a chance to read
Don Miller’s column from Jan. 17, please do. As traders, we are a driven
bunch, Type “A” all the way. However, as Don points out, it isn’t until
something dramatic happens that we pick our heads up and realize that there is
more to life than the markets. I am as guilty as the next guy, the markets are
in my blood, I cannot change that, but Don’s comments gave me pause for thought.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 909 | 1041 |
| 901 | 1031 |
| 894 | 1019 |
| 885-88 | 1011 |
| 877 | 999 |
| *868* | 989 |
| *858* | 983 |
| *846-48* | *979* |
As always, feel free to send me your comments and
questions.