Third Move’s A Charm
A half point!? I
sat there motionless for a split second, and then immediately jumped on the
keyboard to throw out the buy orders. As I had mentioned yesterday, a decision
that was on the outer fringes of the bell curve was the only thing that was
going to lure me in on the announcement. It was a decent trade, but certainly
not a real “whale.”Â
Referring back to the old adage, the third move
is the charm, that is where I focused my attention from then on.
Naturally, the reversal off the initial upside
burst is not normally anything I would take, the trend is up and I just finished
navigating out of a long position, I have not had enough time or focus to get
off an effective short.
The one thing that was critical though was where
we sold off to, 916, a critical level in the S&Ps over the last several days. As
you can see from the chart above, the market stopped dead there, consolidated,
then broke hard and fast. This was indeed the “charm” that the third move can
provide.
A handful of stocks were all taken lower on that
move, whether you traded
(
C |
Quote |
Chart |
News |
PowerRating),
(
WMT |
Quote |
Chart |
News |
PowerRating),
(
MSFT |
Quote |
Chart |
News |
PowerRating),
(
IBM |
Quote |
Chart |
News |
PowerRating) or
(
EBAY |
Quote |
Chart |
News |
PowerRating).Â
This move, in hindsight, appears to have been a
real shakeout, as the S&Ps powered right on back in the minutes that followed.
So now what? It is an interesting situation, a
50-basis-point cut. Is the Fed really saying the economy is in deep sh&#, or are
they just really trying to prime the pump and get some final demand into the
equation? I do not know (I have my opinions, but that is not important), but the
charts are telling us some key things that as daytraders we can key off of.
Gold stocks, a half-point cut in rates, and this
sector soars. Naturally with the dollar getting smacked due to the rate cut,
this is not uncommon. The
dollar and gold are trading inversely, so take your cues from the dollar for
gold trades. The Dollar
(
DXZ2 |
Quote |
Chart |
News |
PowerRating) has
support 105.13, a break there would set-up a re-test of the July lows,
103.60. Ironically, we have a stock market now that is shrugging off the weak
dollar, unlike July.
As a result, keep an eye on the gold stocks. If
they begin to trade even a fraction as well as they did back at the beginning of
the year, some good trades will be had.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 940 | 1111.25 |
| 937 | 1097.50 |
| 934 | 1082 |
| *925-27* | 1072 |
| 918 | 1069.75 |
| 914 | 1057.50 |
| 908 | 1048.50 |
| 903 | 1043.50 |
* indicates a level that is more significant.
As always, feel free to send me your comments and
questions. See you in TradersWire.