Zero Conviction

• January 28, 2002
• Dave Floyd

The standoff
continues. The bulls and bears appear as though they will continue
their stand-off as the market looks forward to more earnings and an FOMC
Meeting which begins tomorrow. This weekend’s comments by Dave
Landry, Larry
Connors and Mark
Boucher underscore what most are seeing right now, zero conviction.

I continue to trade very selectively
and am very content sitting tight for the remainder of the day, after making
early morning gains. The afternoon sessions have been just awful recently. Going
into the Fed meeting tomorrow, I suspect this afternoon will be quiet again.
Naturally, there are always some set-ups if you stay vigil.  My game plan
remains the same:

1.  Trade assertively in the
first hour, while remaining very selective.

2.  Never break any of my rules.

3.  Sit on my hands after the
first hour unless there are ideal setups.

4.  Tend to seek out setups on 5,
15 and 60 minute bars for remainder of day since volatility for HVT (High
Velocity Trading) is non-existent.

Referring back to point #4 above, keep
an eye on this chart for a potential setup. While I like the technical pattern
on both the hourly and daily, this stock is very thin and has been inversely
correlated with the S&Ps recently. If the market does deteriorate this week
or ominous signs surface about the future of the "fabled" recovery,
this stock may see some action. Given that this company is "unhedged"
in terms of their exposure to the fluctuation of gold and silver prices, any
increase immediately translates to the bottom line, unlike many other gold and
silver producers who sell their production forward.

                              

Key
Technical Numbers

Thought for The
Week:

If there was ever a
more appropriate time for this quote, it is now.

“Although
the cheetah is the fastest animal in the world and can catch any animal on the
plains, it will wait until it is absolutely sure it can catch its prey.
It may hide in the bush for a week, waiting for just the right moment.
It will wait for a baby antelope, and not just any baby antelope, but
preferably one that is also sick or lame. Only
then, when there is no chance it can lose its prey, does it attack.
That, to me, is the epitome of professional trading” 
—Mark Weinstein

Have
a great week, use protective stops on all positions, and, as always, feel free
to send me your comments and questions. See you in TradersWire.

Dave