These Are The Kinds Of Stocks I Prefer In This Market
You
just have to look at the Iraq coverage on TV now
to see whether the major indices are up
or down. You don’t even have to look at your monitor. This has not prevented
some good opportunities, however, as the indices trade around the key levels.
For example, that 870 pivot got a good workout yesterday. The first was the Trap
Door from the 869.67 SPX
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PowerRating) low as it re-crossed 870 to 875.66. It
then declined to 868.78, giving you an RST setup with the “2” and “1” points
being on Tuesday. The 10:10 a.m. ET hammer was the signal bar with entry above
869.67, and of course, it was another re-cross to the upside above 870. This
move only carried to 875.26 before declining to another RST setup after making a
new intraday low of 866.47 on the 2:00 p.m. bar. RST entry was above 868.28,
which was an inside bar entry. This trade was the purest of a choppy day as it
re-crossed 870 once again and traded up to 875.80. For you RST experts, that new
intraday high was an RST sell setup. FYI: Trading below 866.47 sets up still
another potential RST, and this one will be a seven pointer, which could be a
good one. Remember, the pattern must have some symmetry, so a knife down of 20
points or so negates any symmetry.
If you have not learned
RSTs, you were still able to scalp the 870 pivot level several times yesterday.
The last two days have four trips up to the 875 – 876 level, so that becomes our
minor resistance today, then 884 above that. On the downside, we have the 860 –
863 level. Any break below this 860 – 863 level might pick up support at the 850
– 852 level. The more interesting downside zone for the SPX to me is the 840
zone, and on the Dow
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PowerRating), it’s 8000 – 7950.
On the stock side, you
should be making a list of the stocks that have outperformed during this current
rally, and make sure the group and sector were consistent with the stock move.
These are the kinds of stocks I prefer in any pullback setups.
As I finish this, I see
the S&P futures are off about 6 points, the Dow is -53, and the Nasdaq -8, so
our first opportunity will most likely be Trap Doors.
Yesterday, NYSE
volume was 1.28 billion, a volume ratio of 35, and breadth -401, so it was more
of a war drift, rather than war selling. Nothing has changed my observation that
Iraq will get ugly before it gets resolved, and that means the highest
probability is a negative surprise. If you have just put on a long position late
in this current rally based on emotion, then I hope you have an option strategy.
Have a good trading day.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS