Volatility Vs. Consistency
It’s always nice when
early charts confirm pre-market expectations. Combine yesterday’s close above
the 13-minute 15 MA after the initial post-FOMC
shake-out, a potential breakout from days of consolidation, and early supports
on the intraday charts, and I’ve got blisters on my fingers from buying every Q
pullback I could find. Tough to tell where we go from here, as we’re basically
oscillating mid-day at the new price levels, but I’ll be continuously looking to
the three-minute 15 MA for support on any further moves to the upside, as well
as the 13-minute to keep the forest in perspective for the trees. Much of the
bullish move has obviously played out, and I’ll be pretty selective from this
point forward.
2001 10:55 AM EDT
Hello?
Here’s a synopsis of some typical
conversations I’ve had with some of my intraday stock trading friends and
students lately:
Friend: How’s the trading going?
Don: Not too bad…trading the Qs now. How about you?
Friend: Up and down. Still trying to get used to those decimal spreads
and new rhythms.
Don: You ever consider trying the Qs?
Friend: Not really. I’ve been watching it, but it seems to take
forever to move. There’s just no volatility. I prefer stocks like
(
CIEN |
Quote |
Chart |
News |
PowerRating),
(
JNPR |
Quote |
Chart |
News |
PowerRating) and
(
QCOM |
Quote |
Chart |
News |
PowerRating).
Don: er, Did you know CIEN and JNPR are now priced lower than the Qs?
Friend: Hmm. Are you sure? I’ll have to check. But that QCOM still has
nice moves.
Don: More upside?
Friend: Exactly
Don: More volatility?
Friend: You got it.
Don: Understand. By the way, how’s the consistency going?
Friend: Still struggling a bit. I seem to give back what I make the
next day. Got caught a bit today with a quick move against me and had problems
adjusting.
Don: Oh. What was the stock?
Friend: QCOM.
OK, the Qs can be dull, boring, and sometimes about as exciting as watching
“It’s a Wonderful Life” (black-and-white version) for the
one-thousandth time during the holidays. There’s no morning news on the Qs, no
analyst upgrades, no Q bashing on any of the major networks, and nobody makes
stock calls on the Qs. Talk about the Qs at a cocktail party and you’re likely
to end up as popular as a Red Sox fan in New York. Yet I ask the pundits to
review exhibit A below, which chronicles the NQs and oh-so-boring Qs during
yesterday’s post-Greenie market overreaction and oscillation:
Wednesday
June 27, 2001 NQ01U
(1)
Approx. Equivalent QQQ Price
Admittedly, it was
FOMC day, the Nasdaq had been coiled to do “something,” and we’d been
trading within a sardine can of a daily range over the past week. Yet there was
similar intraday volatility and opportunity last Wednesday (absent the initial
cliff-drop). Oh, and this past Monday. And
today! Any remaining perception of low
volatility can be managed via effective lot-size management…while saving on
Tums at the same time.
Volatility vs. consistency. And for some, excitement vs. income. Interesting
choices.
Good trading.
Don Miller
P.S. If you missed
my first column that explained why I use NQ charts rather than QQQ charts,
please take a minute and review the reasoning there, which is key for the
short-term intraday trader. Thanks.
For
a more in-depth look at how Don trades the QQQs, click here.