This Is When A Little Restraint And Patience Pays Off
Last Wednesday, July
2nd, my commentary focused on the need for two things in our present
market environment:
1. Rigorous discipline
2. The flexibility to extend your time frame
slightly after the morning session.
I refer back to this simply because with this
approach you can take a good deal of the emotional aspect of trading out of the
equation and rely purely on an objective analysis of what is going on, rather
than the noise which typically accompanies many good trades.
That morning, I had mentioned in my
Trading Room that we take a look at
Qualcom (QCOM). The morning session had offered its typical
assortment of Fade the Gap trades and
standard HVT set-ups, but as we all know,
after the first hour, you either pack your bags of extend the time frame. We
opted for option number two give that the night before I had identified
QCOM setting up as a nice long after a
pull-back..
As you can see, smooth sailing on the good ship
QCOM.
However, as an HVT’er
we are always concerned about what the S&P futures are doing, and rightfully so,
the saying “as the futures go, so do the stocks” is quite accurate.Â
Nonetheless, if you were objective about the trade and your analysis, the tools
provided in my column that same day, may have offered you some convincing
reasons to hang with the trade. Take a look at the chart below:
At both of the areas denoted by the letter ‘X’,
there was a mini-break-down in the S&P’s, however, like most emotional extremes
they typically appear worse than they actually are. You will notice on both of
these occasions, there were 3 very solid reasons to observe what happened as
opposed to trying to outsmart the market.
1. The lower Bollinger Band was being touched
2. Stochastics were oversold and on the verge of
turning back up
3. The S&P’s were selling off into support,
denoted by the FN’s from my column that day.
Yes, for many traders, myself included, I was
ready to throw in the towel and lock in my profits, but a little restraint and
patience paid off, on both occasions.
It is tough to keep your head when everyone else
is losing theirs. This is why solid analysis, both technical (as in this case)
and fundamental will keep you focused on the task at hand.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and
questions.
Dave