This Week’s Battle Plan
Live
from the Bellagio Hotel!
It’s
Saturday afternoon, and I’m in heaven.
I’m sitting in the Sports Book at the Bellagio Hotel,
surrounded by dozens and dozens of overhead screens. College
basketball, Pro basketball, all-star hockey games, racing from around
the country and more are all happening at the same time.
And Sunday, the mother of all sports events will be played. And
my Pats will be there.
Few give them a chance of winning; they’re a 14-point dog.
But they’re doing what no one in the world expected them to
do…play in the Super Bowl.Â
As I said, at least until kick-off, I’m in heaven.
Back
to Earth
Last
week, my opening words in this column were, “The days of boredom
may be over.
It looks like we are setting up for a move this week…maybe a
big move.â€Â
So what happens? Tuesday we implode 247 points, Wednesday we
explode for 146 points, and Thursday we move higher by another 158
points. And
where does this leave us for the week? Right where we started.
Huge daily moves three days in a row.
An abundance of volatility.
The daytraders are ecstatic.
For them, the good ‘ole days have returned.
The momentum guys are not so happy.
No trends for them.
No follow-throughs…yet.
Let’s
first look at and learn from the reasons why we had such large
intraday moves last week.
For those of you who have read my
books, you know that low periods of volatility are usually
followed by high periods of volatility (and vise-versa).
When a six-day or 10-day historical volatility reading is half
its 100-day historical volatility reading, there is a high likelihood
that a large move is near. This
is the condition we had early last week.
They predict movement. You need to then combine these low-volatility
situations with specific directional strategies to help capture the
upcoming move (you can read more about this in the Volatility
Lessons I’ve written that are scattered throughout TM
University).
For example, on Wednesday night, we had multiple CVR buy
signals found on our Market
Bias page; (on my nightly trading service, we had six buy signals,
an event which is rare, but leads to a very high percentage return).
When you combine the above, you have the making of a very solid
move with a directional bias.
This is a big edge…an edge you should be able to capitalize
on over and over again.
There
are many more ways to use the combined volatility and directional
movement. Kevin
Haggerty cc’d me on an e-mail he sent to a member late in the
trading day on Wednesday.
He combined volatility with his own in-depth analysis and
trading strategies and he came to the same conclusion…there was a
high likelihood for a big move to the upside for Thursday.
Kevin’s analysis was not an isolated case; he does this type
of work all the time. And I believe Kevin’s biggest edge is the fact
that he is nearly Zen-like in his analysis each day.
He starts with the premise that he has no opinion. He then does
his homework, puts the pieces together, and lets the market tell him
what it’s going to do.
No ego, no trying to be smarter than the market.
It talks to him each day, and he listens.
Kevin’s not smarter than the market…but he’s definitely
smarter than the marketplace.
Read him each morning.
He’s a gem.
I know he can at times be difficult to follow, but even if you
only understand 60% of what he has to say (as I do), you’ll be ahead
of the rest of the crowd.
This
Week
This
week’s analysis is brief and to the point.
First, there is no market bias for early in the week.
But we again find the averages at key levels. The SOX is at its
200-day moving average, and the NDX is at both its 200-day and 50-day
moving averages.
If these two indexes move strongly above these levels, and then
you combined this with the fact that the one—week and one-month top
RS list includes the SOX, the transportation index, and the retail
stocks, you have the making of a bull market move likely to occur.
In the meantime, be Haggerty.
Let the markets tell you where they’re going.
They will.
They always do.
Two
More Signs the Bull Market is Digging In
1. Â
Over 700 stocks hit new 52-week highs last week.
2. Â
This week, copper
(
HGH2 |
Quote |
Chart |
News |
PowerRating) exploded higher. Mark Boucher has
talked about this in the past.
An economic recovery will be preceded by moves in the
industrial commodities.
Coming
Up
Tim
Truebenbach has a new trading service coming out for intermediate-term
traders later this week.
Lewis Borsellino has an E-Mini trading service also coming.
And later this month, we will be adding a proprietary database
stock rating service co-created by Andy Chao.
Andy is a Harvard graduate, Wharton MBA (he won their Rocket
Scientist award) and traded a $20 billion portfolio for PIMCO.
Andy’s weekly quotations (Power Ratings) are a 1-10, one-week
ranking system.
His stocks ranked 10 have previously outperformed the average
stock by 1 ½ – 6 times over a one-week period over the past decade.
Stay tuned for the release of these three services.
Live
Alerts
If you day trade or
short-term trade, take the one-week
free trial to our new Live Alerts
service. We put out between 50-80 stories/alerts each day on stocks
that are moving or are likely to move. The alerts will show you
set-ups and give you information you can use immediately in your
trading. Click
here and you’ll have access to the Live
Alerts service beginning Monday morning.
Have
a great week trading and from the four TM New Englanders (me, Don
Miller, Greg Che and Dr. Paul Ruggieri)…GO PATS!
Larry
Connors and
Brice Wightman
Larry Connors
is CEO and co-founder of TradingMarkets. He is also the author of four
books on trading, including Street
Smarts,
co-written with Linda Raschke, Connors
on Advanced Trading Strategies, and his latest release, Trading
Connors VIX Reversals.
Brice
Wightman is a Market Analyst at TradingMarkets.com.
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