Today’s most important key level
On Tuesday, the Nasdaq traded down on the open but found its low in
early trading. It then drifted sideways to upward ahead of the Fed. Then, after
some gyrations, it began to rally. Finally, it gave up some of those gains going
into the close–enough to keep it out of the plus column. This action has it
bumping up against short-term resistance and stalling short of old highs.
height=”311″>The S&P put in a somewhat similar performance but ended further in the
minus column. It too is stalling short of its old highs.
height=”311″>So What Do We Do? As I preach, follow-through is key. Last
Friday, I was very encouraged about the market’s action. Since then
though, it hasn’t gained any more ground. As mentioned above, this action has it
stalling short of its old highs. For those keeping score, this stalling action
is near the .786 retracement level. Needless to day (I’ve always wondered, if
its needless to say, then why do you have to say it?), it’s important for the
market to make it though this resistance level. I guess for the time being, this
technical information doesn’t matter since Google
(
GOOG |
Quote |
Chart |
News |
PowerRating) is trading over 70
bucks lower in after hour trading (no, I’m not making any more predictions here,
I don’t feel like eating another hat!). This will likely weigh heavily on the
market. Therefore, if the market can shrug this off and trade back above the
aforementioned resistance, we could have a bona fide bull market. I’m concerned
that it won’t be able to do this though.
As far as setups, as mentioned recently: while you’re playing “wait and see”
with the
market, it’s usually a good idea to look to commodity related areas since
they can often trade independently of the indices. These include gold, metals
& mining, and energies. However, these areas remain overbought and are due to pull back.
Therefore, trail and scale on existing
positions here vs. initiating new ones.
Same Bat Time, Same Bat Channel
Wow, is it almost Wednesday already? I guess this is so much fun, I keep
losing track of time. Anyway, on Wednesday February 1st, at 11:00 EST, I will be
doing my weekly audio/visual interactive lesson. This week I’m really excited:
In addition to discussing current conditions (e.g. those KEY levels mentioned
above), we have a “protective stops on every trade” example, a
“better than a poke in the eye” example, some “continued thanks
for the fish” examples, and a plethora of other GREAT examples! Then,
provided there are no glitches, I should have plenty enough time to take your
questions on individual stocks or trading. Admission, as usual, is free (and
many tell me its worth the cost!) but limited by the software. Email me if you
need instructions (the same each week) or if you would like the archives for the
past year or so (covering setups, money management, scanning, sector analysis,
etc…).
Best of luck with your trading on Wednesday!