Why You Should Become A Sharp-Shooter
Ever get the feeling
that you might be missing something when the trading day ends? When
the markets get quiet and a bit apprehensive, as they are currently, you might
begin to second guess your trading acumen. Don’t put yourself through that
mental exercise, you are not the only one who suddenly feels like the rules have
been changed. I think it is safe to say that the employment numbered from last
Friday were quite a surprise, many traders positioned short expecting some
downside follow through, when it did not materialize today, perhaps (I stress
perhaps, because this is pure speculation and hearsay from other traders) but it
does make sense. This market for the last nine months has been nothing but one
big pain in the butt, with the occasional flurry of volatility. If you are an
investor, this market is a lay-up; if you are a trader, well, you may not feel
the same way.
But I digress. The market seems to be leaning
more towards the “inaction” mode yet again. Many traders, with earnings reports
coming out, are starting to do a lot of straddles (Haggerty mentioned it too)
expecting that something may set the market off in a given direction with
conviction. I can only hope that some volatility comes back, but if it does
not, we need to deal with the hand we are dealt. I have pretty much stayed the
course and traded assertively in the first two hours then gone into “prove it to
me mode” before I risk capital in the afternoon session. The Retailers,
Oil Drillers and Gold Stocks continue to offer some decent HVT
set-ups intra-day for those that are patient. The one topic I discussed
yesterday with a colleague was that this was the worst time to go on a quest for
a “new” way to trade the market, rather, it is a time to become a sharp-shooter,
make your money and pack it in.
^next^
While I know this topic has been repeatedly
discussed here over the last several months, it is the primary reason that I
have allocated the remainder of my day to adapting to markets that are showing
good range for swing trading. Hence, the repeated focus on FX. The Dollar’s
solid performance yesterday on the heels of the ECB’s
Trichet commenting on the relentless rise in the Euro has been the first crack
in the Euro’s move up. Will this mark a trend change? I doubt it, however, a
shot has come across the bow. I now feel that some short-term “long dollar”
trades may be in order. I went long the $/CAD
and $/CHF expecting there to be some follow
through over the next day or so. The Euro put in a nice technical bounce (50%
retracement of the high/low of Jan 8th – Jan 12th.
The next few days will indicate whether strong
words will win out over economic realities. I suspect the answer is no. The
BoJ cannot alter a rising Yen even with
trillions of dollars, words are likely to prove less effective. Nonetheless,
many of the currencies are over-bought short-term and may bounce. I will keep
you posted.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and
questions.