The Only Way To Navigate This Market
I
changed the date of today’s article, but
essentially it is the same theme. Despite breaking down yet again in the S&Ps,
there was no accompanying panic selling. Orderly price action was the theme yet
again. Luckily, like most days, there are always opportunities on the opening,
which has always been my bread and butter. A trade in
General Electric (GE) will demonstrate this.
For the remainder of the day, the
price action did not offer any more “distortions.”
There were a couple of potential setups, but without a lot of conviction, I did
not take them.Â
The trades that continue to work
reasonably well intraday are trades where the time frame is extended. Like
Kevin Haggerty has been saying, reduce share size and extend the time
frame. The choppy, albeit trending nature of the market forces one to take this
approach. Physical stops placed at reasonable price points must be used to guide
you out of a trade or more importantly keep you in, the erratic nature minute to
minute causes one to think with one’s emotions in this market, not allowing one
to be objective.
The chart of
Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating) is a great example of letting price action take you
out of the trade. Naturally after the
Slim Jim
was broken, you would have placed a buy stop above that area, but this never
occurred. Depending on your risk tolerance or tolerance for sitting through the
jigs and jags (of which there are very few) the stock sold off in a very orderly
fashion. Not once did it go above its 20 period EMA. Not a huge trade in terms
of points, but with a stock like TYC, which
is not terribly volatile, but very liquid, 50 cents adds up on a decent size
share position.
Bottom line:Â Be patient and selective
and most importantly, let reasonably set stops take you out on trades that
extend beyond 5-10 minutes. Remaining unemotional is the only way to navigate
this market.Â
Support/Resistance Numbers for S&P and Nasdaq Futures |
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* indicates a level
that is more significant
As always, feel free to send me your
comments and questions.
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