Uncertainty

• October 18, 2001
• Dave Floyd

Uncertainty — the
one thing that will stop a
“bull” dead in its tracks. Despite the market liking the earnings from
(
IBI |
Quote |
Chart |
News |
PowerRating) and
(
INTC |
Quote |
Chart |
News |
PowerRating), further anthrax scares sent traders and investors
running for cover.

When I got up yesterday morning,
turned on the TV, flipped to CNBC to catch the futures quote, I was
planning for a day where I would be unwinding some short positions, admitting
that the tape was right….this time. The market had been open barely 20
minutes before the selling began in earnest, never really subsiding and then
closing on the low of the session. The news allowed my positions to remain open.

Around mid-day I was in TradersWire,
I pointed out to the participants that 1092 (KTN in
the December S&P futures which was not in my column since it was derived
after the opening) appeared as resistance as the market was coming off the low
at 1:30 p.m. ET. It turned out that that number dictated trading for the
remainder of the afternoon. The five-minute chart below will illustrate three
separate occasions (there were more, but these were the obvious ones) where you
were able to enter short sales with immediate confirmation.

Those of you who have read my column
for a few months will recognize the following chart. I wrote about Washington
Mutual
(
WM |
Quote |
Chart |
News |
PowerRating) several weeks back, and I was not real positive on the stock.
The stock remained strong even in the sell-off post WTC. Last night’s earnings
report appears to have been the catalyst to break it down technically. WM
closed decisively below its 200-day moving average. Is there more room on the
downside?

Yesterday’s price action may have been
the catalyst which will send this market back towards the September lows.
Volatility should continue to be evident in the coming sessions. The real key
numbers for the indices will be the following:

Dow:
9208.27 S&Ps:
1076.55 Nasdaq:
1314.73

Key
Technical Numbers

I will be in TradersWire
periodically today with further observations and other technical levels I am
seeing intraday. I expect that trading will be active and very conducive
to HVT. As always, feel free to send me your comments and questions.

Dave