Why March 10 May Be Important
Wow, Friday was certainly a roller coaster ride. I have to admit I felt a bit
rusty when I was thrown back into the HVT
ring in a big way on the heels of the bin Laden news. It has been a while since
we have seen that type of price action. I give the market my unwavering
permission to bring that back on an hourly basis. I was on a strict exercise
regiment over the weekend so that I am fully prepared for HVT again. I put away
the recliner in front of my monitors and brought back my office chair.
The first trade of the day started off after the market recovered the early
looses, pulled back toward the EMA, then pushed a bit higher.
Most of the thickly traded NYSE and Nasdaq stocks were excellent proxies for
this setup.
One trade which I did attempt to take, but was not able to get filled on, was
to fade that big spike up on the heels of the capture. Yes, that completely goes
against my normal stance of trading with the trend, however, this was a special
circumstance trade. The reason was simple, the news, while bullish, was not
exactly a decisive victory, so at the very least you had to bank on some sort of
a reversal. Second, the spike higher stopped right at a key level,
FN 829,
which I have been highlighting for the past week or so here in the column.
Absent the idea of placing a trade against the trend, the stochastics
confirmed this trade.
This is an important trade simply because it is the exception to the rule,
however, when utilized at the right time, it produces great results. Just look
at how stocks like Citigroup,
IBM and KLA Tencor
reacted. These are big profitable trades. This is where you make up for all the
lame trading we have witnessed in recent weeks.
In answer to the e-mail I received on Friday morning, no, I did not catch the
move up on the bin Laden news. In retrospect, the setup was there, but for some
reason at the time, I was not seeing a real convincing reason to get long. How
it would have played out absent the news is anyone’s guess. Simply reacting to
that first range expansion bar had not been prudent in the last few weeks.
A few weeks ago I had mentioned that a Fibonacci turn date may occur on or
around March 10. As you may recall, this analysis does not determine direction,
only time. Naturally we would expect the immediate trend to reverse at this
time. Friday’s bullish close (see chart below) may validate that a short-term
trend change is upon us (I stress short-term).
You will see the same pattern on the S&Ps, although the Nasdaq daily chart
does not show the same pattern.
I have no intention of drawing any trading/investing conclusions from this,
only to illustrate how I look at certain patterns and cycles as it relates to
the slightly bigger picture.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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