Trade ‘Em As You See ‘Em

• March 12, 2002
• Dave Floyd

While it was not much of a pullback intraday,
it certainly made trading a bit better yesterday. While certainly not back to
the fanfare of early last week, the market offered several more setups as the
market digested recent gains. Nonetheless, the market appears to be holding in
there pretty well. Given that there are no “major” economic numbers
due out this week, we may need to wait a while to see where this market will
ultimately take us. Right now it is pretty clear the trend is up, but if I can
throw out that dreaded seven-letter word, opinion,
the market is too ahead of itself and may be downright incorrect over the next
few months. Again trade ’em as you see ’em, but always be aware of curve balls
on your longer-term trades and use protective stops.

The SOX
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the lead sled dog that is moving the market. There are not too many rallies in
the S&Ps or Nasdaq that are not lead by the SOX. To ignore this index
intraday is foolish. I have a tick chart and a five-minute chart of the SOX up
at all times. Keep an eye on these levels (KTNs)
in the SOX for today’s session; they can alert you to potential reversals that
will give you a nice edge.

SOX KTNs:

I continue to find buying the pullbacks in uptrends
intraday HVT to be a very frustrating process. The stocks go up “kicking
and screaming.” I was in one trade where the S&Ps rallied pretty well,
yet only made a few cents. It was not a result of playing the weaker sector. The
sell-off we had in the afternoon was where trading got interesting. Needless to
say there was good follow-through on the sell-offs. In fact, 3/4 of my net
yesterday came from that hour of trading.

So what do you do? Continue to be selective on entries
and wait for the more robust trades on the short side. It appears as though the
opening is going to provide the much needed pullback for intermediate-term
players, as well as some potentially excellent trading opportunities for HVT
players. Given that the market has been a bit quiet the last few days on the HVT
front, I will be increasing my share size on a per trade basis if the market
loosens up.

Key Technical
Numbers (futures):

S&Ps	Nasdaq
1192.5Â	1611
1183 (confluence)	1593
1179 (key resistance)	1575-81
1169-74	1559
1158-60 (confluence)	1546
1147-50   Â	1528-34
1141	1510
1135 (key support)	1504 (key support)
1125	1485-87 (key support)
1120 (confluence)	1471
1115	1460 (key support)

It is rather comical to see how much the market has ran
up in the last few days despite the fact that companies like Intel
(
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business. Additionally, Lucent
(
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(
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(
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PowerRating) receives a downgrade. Sure, I know the GDP numbers were pretty
robust, but inventory build-up will only go so far. Until there is adequate
final demand, which appears to be noticeably absent, this rally may just flame
out. Only time will tell. In the meantime, step up to the plate and take
advantage of what appears to be a nice trading day unfolding before us.

As always, feel free to send me your comments and
questions.  See you in TradersWire.

Dave