Traders 3, Casino 0
It was
just a great day for traders is
the only way I can say it. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) gave us that first contra
move on a Trap Door short below 947 which ran down to 931.32. Entry was on the
fourth bar on your five-minute chart below the low of the inside bar. Trading
the contra move after the early futures game once again is a windfall for
daytraders. The biggest move of the day came on an RST long with entry above
933.30, which was the high of its 931.32 low bar. That move ran to 951.59.
There was another afternoon down move
which was an RST sell below 948.92, which declined to 937.91 before the
last-hour mark-up game which carried the SPX to a 948.97 close.
After catching the first
two big moves, most traders would have taken profits on the RST long rather than
initiating the RST sell. After the first two excellent trades, the tendency is
to bank it and not risk it in the last one-and-a-half hours of trading. Either
way was a good decision, it just depends on how you manage your money and your
trades. FYI: Two moves in this corner as those of you on TradersWire
know.Â
The SPX bumped up to the
highs of resistance for the fourth time since Monday and is trading between the
low end of resistance at 930 through the 950 top end like a beachball which has
afforded the daytrader many opportunities in both proxies and individual stocks.
Once again, we are
getting some creative volatility into the full moon. That’s a pun for my friends
on TradersWire which comprises some talented and dedicated traders. I have
learned some new ideas on it, but have also realized once again from the
conversations that many traders out there must continue to improve their trading
education, which all of those that I have spoken to seem to want to do.
The market has been able
to overlook some recent bad news just as it exaggerated on the downside, but
it’s pushing the envelope after 21 days of rally since July 24. Excuse me, is
that a Fib number? This recent run up has seen the SPX advance 22.7%, which is
hardly sustainable without some sort of pullback. The stretch levels for the SPX
and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) that I mentioned the other day are 975 – 980 on the SPX
and 9100 – 9200 for the Dow. Certainly any continuation entries above resistance
must have tight stops as you have witnessed the volatility in this trading range
into the 930 – 950 resistance.Â
NYSE volume was 1.3
billion again, just below average, but the volume ratio was a strong 75, and
breadth excellent at +1313. It was also a positive that tech outperformed as the
NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) was +2.7% and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +2.4%, while
the Dow gained 1.0% and the SPX +1.3%. The SOX flip-flopped with a +4.7% gain
vs. the previous day’s loss of -4.8%. That’s five winning sessions out of the
past six for a net gain of +20%. It pays to follow those weekly charts,
especially when at extremes of a move when you anticipate a reversal or
confirmation of a change in direction.Â
FYI: Make sure your
trading list going forward includes some big blue chips with some good balance
sheets. I see too many of you on TradersWire going right back to the junk names.
After a bubble decimation like we’ve had, the mood is tentative, and these blue
chip stocks will be steady traders as portfolio managers soothe their wounds and
fears as they try to upgrade the quality of their portfolios.
Have a good trading day.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS