Trap Doors And Volatility Bands
The Oil
Service and Drug stocks turned green out
of the box and the anticipated weakness in Techs was immediate. The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating),
having rallied 33% in 16 sessions, combined with the pre-FOMC hype and the GLW-type
warnings, it created the air pockets. The OSX and DRG indexes were set up in
consolidations at or just above their 200-day EMAs.
The Drugs have, of course,
been trading contra to the Techs. The energies were the strongest play in
percentage moves with increased volume. The drug stand-out was
(
AHP |
Quote |
Chart |
News |
PowerRating) +5.4%
on a 61% increase above its average daily volume, and
(
ABT |
Quote |
Chart |
News |
PowerRating) +5.5% at 2%
less than its average daily volume.
(
MRK |
Quote |
Chart |
News |
PowerRating) +3.9% on a 9% volume increase
and
(
BAX |
Quote |
Chart |
News |
PowerRating) was also +3.9% on less-than-average volume.
The biggest drop-off in
volume for the Techs was
(
SUNW |
Quote |
Chart |
News |
PowerRating) -4.8% on -50% of its average volume,
(
IBM |
Quote |
Chart |
News |
PowerRating),
which was flat but -47% of its volume and
(
ADI |
Quote |
Chart |
News |
PowerRating) -3.3% on the day at -47% its average
daily volume. When the buyers walk away, the air pockets arrive. It
takes capital to move stocks up, but just fear and walking away by market makers
to create big air pockets.
After hours, you got
(
PMCS |
Quote |
Chart |
News |
PowerRating)
blowing up by about -32% on its slow warnings, and
(
JDSU |
Quote |
Chart |
News |
PowerRating) which was down
13% on two-and-a-half times its average volume during the regular hours. PMCS was down 7%
on just 18% more than its average volume during regular hours, so that was more
of a surprise. Keep in mind that many of the Techs have had major moves over the
last three to four weeks.
(
PMCS |
Quote |
Chart |
News |
PowerRating) +82%,
(
JDSU |
Quote |
Chart |
News |
PowerRating) +76%,
(
AMCC |
Quote |
Chart |
News |
PowerRating) +92%,
(
SEBL |
Quote |
Chart |
News |
PowerRating) +70% and
(
ELNT |
Quote |
Chart |
News |
PowerRating)
+188%. On the low side you have a
(
MU |
Quote |
Chart |
News |
PowerRating) at +65% in just 19 days.
As a short-term trader, you
want these downside airpockets which create more setups and get the Generals
back in at more desirable prices where we can get some more thrust. If you are a
trader and have been debating bottom or trend, then you have missed the
strongest tech rally in some time, rather than trading what
is, which is
following the buying pressure.
For today, you know where
the previous day’s lows are for continuation short entries, but I doubt you get
them because of early gaps. Prepare your Volatility Bands and put your Trap Door
hats on while focusing on the best relative down stocks after the opening
downside move. You want to be with the market makers and specialists on the
way back up for the first contra rally, after which you will get some air-pocket
shorts. The professionals will be taking out emotional sellers at substantial
discounts today.
|
(March
|
||
|
Fair Value
|
Buy
|
Sell
|
|
8.80
|
10.10 |
7.50
|
Pattern
Setups
In the energies, if they
can get
any kind of continuation, look at
(
APA |
Quote |
Chart |
News |
PowerRating),
(
APC |
Quote |
Chart |
News |
PowerRating),
(
HAL |
Quote |
Chart |
News |
PowerRating),
(
SLB |
Quote |
Chart |
News |
PowerRating) and
(
NE |
Quote |
Chart |
News |
PowerRating). In the drugs,
(
SGP |
Quote |
Chart |
News |
PowerRating)
(which is in a consolidation just below the 50-day),
(
LLY |
Quote |
Chart |
News |
PowerRating) which is in a
consolidation right at the 200-day, also
(
BAX |
Quote |
Chart |
News |
PowerRating) and
(
ABT |
Quote |
Chart |
News |
PowerRating) which recrossed its 200-day
yesterday.
(
AHP |
Quote |
Chart |
News |
PowerRating) is up 11% in two days on range expansion and volume, so pullback
entry will be better if the Generals decide to come and push the envelope. If
you get a continuation entry, don’t take more than half a position.
In the
medical instruments, look at
(
AGN |
Quote |
Chart |
News |
PowerRating),
(
GDT |
Quote |
Chart |
News |
PowerRating) and
(
MDT |
Quote |
Chart |
News |
PowerRating). Also
(
MRK |
Quote |
Chart |
News |
PowerRating) which recrossed its
200-day moving average yesterday on a wide-range bar if you get a continuation
entry. Two other stocks you might look at are
(
MMM |
Quote |
Chart |
News |
PowerRating) and
(
TYC |
Quote |
Chart |
News |
PowerRating). On the Trap Doors,
look at the Semis and the Chosen Ones, and also those will be your shorts on a
rally back up to the EMAs on the five-minute charts.
Have a good trading day.
