The Tug Of War Continues

The
tug of war continues.
After IBM’s
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disappointing earnings, one would have expected the market to be far
weaker today. But, as usual, logic does
not prevail. Currently, the futures are
up slightly, just below key technical levels. Given
how the market has sold into rallies over the last few weeks, a slight up
opening may be preferable as opposed to a gap-down opening.

Currently, we have the S&P
futures trading at 1218.75, just below the elusive 1221 level, the Nasdaq is
trading at 1705, above minor support at 1700, but still seeking another close
above 1764. Other support areas are seen
at 1211 and 1204.27 for the S&Ps and 1692 for the Nasdaq.
These numbers will provide tremendous trading opportunities as the
indices determine which way they will trade.

Yesterday’s session, at least
the morning half, offered us excellent volume and range.
It required that we double our summer share size to take advantage.
I can’t stress enough how important it is to adjust your position size
to take advantage or play defensively. My
guess would be that the morning session would warrant trading larger.
I will be in TradersWire on the opening sharing my observations
with you.

Planning ahead, different than
having an opinion, is essential to successful trading. Whether it is plotting a
trade in the next five minutes or what you will do when economic numbers are
released, a game plan will give you an edge. Looking
ahead to today, IF the market were to sell off and break through support levels,
there are certain groups that do benefit from market drops induced by a little
fear. Historically, the Drug Index
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is a beneficiary, as well as the Gold Sector
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.
Remember, these are trading ideas, and may be viable for only short
periods of time, anywhere from a few hours to a few days.
Like all positions, don’t fall in love with them and lose sight of the
big picture, which is to make money. Some
stocks in the above mentioned groups would be: 
American Home Products
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, Merck
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, Johnson
& Johnson

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, Barrick Gold
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and Newmont Mining
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.

As always, feel free to send me
comments and questions, davef@tradingmarkets.com.

Dave