This Week’s Battle Plan
Big Move
Coming
The days of boredom may be over. It looks like we are setting up for a
move this week…maybe a big move. There are a multitude of events
occurring over the next five days. And when you put these events
together you usually get one thing…wonderful volatility.
The Reasons…
First, we have the FOMC meeting. This may be the signal of a change in
policy.
Second, many of the Dow stocks will be releasing earnings this week.
As they go, so will the Dow go. More importantly, the market will
then immediately start focusing on the next two quarters of earnings.
Any sign of a pickup in business from these major companies will be
the green light for money mangers to buy these stocks.
Third, we have quite a few major economic reports this week, including
unemployment, GDP, consumer confidence and more. All backward-looking (as all these reports are) but again, the market will key off them to
predict where we’re heading.
Fourth, we’re at low-volatility levels on the very short term vs.
longer term periods. This alone usually precedes large moves.
Putting all of the pieces together spells one thing…a possible
breakout from the 2 1/2 month sideways action we’ve been living
through. And more importantly it spells…OPPORTUNITY.
Where Are We
Heading?
For this upcoming week, I honestly don’t have a clue. The majority of
the short-term indicators I use are neutral coming into the week (I
hold no short-term market direction positions going into Monday). And,
the game of making predictions on earnings, news and economic reports
should be left up to the professionals out there. These professionals
include psychics, Miss Cleo, The Amazing Kreskin, The Psychic Friends
Hotline, and of course, Wall Street analysts and economists (the least
reliable of the group). Us mortals will just have to sit back, wait
for the news and let the market tell us where it is going. But right
now, the market is looking for (and buying) signs that strength is
coming in. And this is further evidenced by the stocks that are
popping up on our lists today.
What’s Popping is
Telling a Story
Look at the industries represented on Friday’s 60
Day New Highs on Double Volume list. Retail, Asset Management,
Airlines, Railroads, S+Ls. These industries lead up, not down. Go to Boucher’s
Top RS/Earnings New Highs list. Consumer stocks flood the list.
Look at the number one performing US industry from the past week,
found on our Strongest
Sectors of the Past 5 Days list. It’s the banking sector. This is
the same point I made last week. If we were on the verge of a major
downturn, there is no way these industries and stocks would dominate
these lists. They lead, not lag.
Again, I have no idea what this week’s reports will bring, or where
they will take us. Obviously a large move is near. But longer term,
until proven otherwise, the strength is in the financial stocks, and
in the consumer stocks. And this is very good. And if the techs ever
start kicking in (I’m a broken record…watch the SOX) we are likely
heading much higher. One of the things I can certainly tell you is to
stay with the strength. The money managers out there are buying the
stocks that are moving. Even the growth guys are buying value stocks
(i.e. banks) when they are moving. Each night, at a minimum, look
at our Proprietary Momentum List, and our 60 Day New Highs on Double
Volume List. These lists will tell you where the money is flowing
into, and more importantly, where the opportunities lie.
Last Year’s Prices
and a Thank You
Beginning Feb. 1, the annual cost of TM is going to be
$195. You can still lock into last year’s rates if you do it this
week. If you’d like to take advantage of the lower prices, call
888-484-8220 ext. 1, or click
here to renew now.
Lastly, thank you to the many of
you who were kind enough to send us emails about the new site and our
three-year anniversary. I greatly appreciated it, and more importantly,
the many people behind the scenes who make this site happen every day
greatly appreciated it. We have much more coming, so stay tuned.
Have a great week trading!
Larry Connors and
Brice Wightman
P.S.
As you have seen from my previous columns, there are a multitude of
ways to trade using the information on this site. I can tell you that
few people use the same information the same way. That’s what makes
markets. But the more knowledge you have, the more opportunities you
will have to profit from trading. After my Patriots upset the Steelers
today (OK, maybe I’m dreaming, but it’s amazing to see this team come
this far), look at lessons in TM
University under the Profiting From TradingMarkets section.
You’ll find an abundance of ways (many of them new) to use the
information from the site and apply them to your trading. This is
knowledge you will have for a lifetime. And much of this knowledge has
come from successful traders who’ve learned these lessons during their
lifetime. The more you know, the more successful you will be at this
game. And that’s a sure thing.
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.