Where Will Today’s ‘Hot’ Stocks Be Found?
Last week’s indigestion
in the major averages, particularly the Nasdaq, may finally be a
prelude to a slight correction in the market which should re-introduce some
volatility. I have long since given up trying to figure out when and if this
market will take a tumble, but what I do know is that as the volatility
continues to contract it brings us one day closer to better price action.
The opening 90-minutes continue to offer the best
HVT opportunities, with so-called “story
stocks” being the prime candidates for trading. Stocks like
DNA and SPW
being most notable on Thursday and Friday. These stocks exhibited the type of
volatility that makes day traders drool. If you have a decent handle on basic
HVT set-ups and some tape reading skills, there was some serious
money to be made. Where will today’s “hot” stocks be found? That is the
problem, they develop as the session wears on, although sometimes early morning
news events may sometimes highlight them in advance.
FX
Regardless of who you talk to, the last two weeks
in FX have proven to be incredibly volatile. Some traders have big grins, some
have big frowns. For me personally, I am stoic, I tasted both the joy and agony
of the moves in the last two weeks. What had seemed like a finely tuned machine
in terms of reactions to economic reports and macro developments, suddenly broke
down. Suddenly, crappy economic reports in the US bolstered the dollar rather
than ravaging it. This made the quick scalp trades in the
EUR a coin toss at best. I had a few of these
trades simply run me over last week. I was left wondering, “Didn’t that report
just indicate that the US lost jobs and cited lower GDP?” It simply did not
matter.
Is there an explanation? Perhaps, but everything
is easily explained in hindsight. One thing is for sure, the
EUR is not the one way bet to 1.30 that
everyone thought just a few weeks ago. Continued comments be
ECB officials have driven the point home that
they are not happy about a rising EUR and have indicated that intervention is a
possible policy tool.Â
The only two currencies that seemed to escape the
bulk of the carnage are the British Pound (GBP)
and the Australian Dollar (AUD). The reason
has more to do with the positive interest rate differential between these
countries and the US as well as the strength of their domestic economies. The
pull-backs in here look like potential buying opportunities. I am presently
stalking a long entry on the AUD. The AUD,
purely from a technical perspective could reach the .8050-.8150 level. The
GBP pattern is still developing.
As always, feel free to send me your comments and
questions.
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