Volatility Is A Beautiful Thing

• December 14, 2001
• Dave Floyd

Volatility is a
beautiful thing for intraday traders. Suddenly, trading off
the one-minute bars was not only possible, but incredibly lucrative. Will the
trend of volatility continue? If you take your cue from the daily charts
of the S&P futures
(
SPH1 |
Quote |
Chart |
News |
PowerRating) and the SOX
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), one may conclude the chaos has only begun.
One needs to be cognizant of the fact that when the indices traded at these
vulnerable levels a month or so ago, the raging bulls came right back in and
pushed the market higher. One thing is for sure, whenever I get to this stage of
euphoria/anticipation about the market being on the verge of “big”
things, it throws me a curve ball. The moral, trade ’em as you see ’em.

The other theme yesterday, as has been the case
over the last few sessions, is to go where the action is. For most of you that
is nothing new, but for many years my approach has always been to stay with one
or two stocks religiously. That approach is not as effective as it used to
be. Adapting by moving to where the action is or trading off of five-minute bars
is the only way traders survive what I would consider a turning point in the
market’s history.

Continue to pay close attention to the SOX; it
certainly continues to lead the market.

Key Technical Numbers:

* These numbers are very close together, but very
key levels. Expect a lot of indecision and choppiness in this area.

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

Dave