Trading Review for 2/3/2000
The market finally digested the Fed meeting results and decided (at least for the short term) that it was time to rally. Or at least that's how it was for indices - many stocks remained trapped in trading ranges even while the various indices were rallying. This indicates to us that there is still non-commitment in the market as a whole and that we should all be on the look out for another short term top over the next week.
Remember, trade what the market does - not what you think it should do.
Successful trading is about knowing where to look for opportunities, knowing when to seize the opportunity (or not), and managing their risk to maximize their profits. To that end, let's take a quick look at Wednesday's trading action relative to the top Trade Prospector signals:
Volatility Compressions
AFFX triggered longs at the 250.3 boundary for 17 points
JNPR gave traders multiple trade entries good for 6-16 points
NOK triggered long at the 186.9 boundary twice - once for 3+ points and again for 5+ points
Trading Range Patterns
SNDK triggered a 1 point short at the 128.6 boundary and reversal players were rewarded with 10 points
GLW gave long trades 4 points at the 150 boundary
TERN triggered traders in and out near the 114.5 boundary for a total of 1-2 points each time
Mutliday Patterns
CRA traded within its boundaries but reversal players picked up 20+ points
VERT gave short traders at the 228.7 boundary 3 points profit and reversal players saw another 12-15 points
SNDK triggered a 1 point short at the 128.6 boundary and reversal players were rewarded with 10 points
Breakthrough Momentum
VIGN was mostly range bound and only gave up fractional trades at the boundaries, however reversal players picked up about 20 points
TMPW triggered longs at the 156.2 boundary for 1-2 points
INCY gave traders two long entries at the 130.8 boundary - one for 6 points and another for 14 points
Momentum Intersections
JBL delivered 1-2 points profit for longs at the 69.3 boundary
T was mostly range bound and only gave fractional trades at the boundaries - reversal players picked up about 2 points
CAH was also range bound and gave no good trade entries
KO gave a fractional trade at the 55.9 boundary
Near Trading Channel
CHKP gapped well above its trading channel and remained there - no trade
NOK gave about 8 points profit at the 185.2 channel boundary
CIEN triggered long trades three times for a total of 1-2 points
Near and Narrow Trading Channel
CHKP gapped well above its trading channel and remained there - no trade
NOK gave about 8 points profit at the 185.2 channel boundary
ISSX triggered longs at the 66 channel boundary for 3 points
Breakout Patterns
IMNX delivered over 17 points profit when it triggered longs at the 137.5 boundary
VSH gave up 1 point to longs at the 43.5 boundary
TIF gapped above its upper boundary and was a no trade
EMR gave long entry at the 54.4 boundary for 2 points
Envelope Patterns
MER triggered long at the 90.3 boundary for 1 point
PX gave only fractional trades at the boundary
NWS triggered longs at the 52.4 boundary for 1 point
Of note to daytraders using the trading index feature - the top three performers in each index category offered traders the following profit opportunities today:
Under $50 - AVA (fractional trades at the boundaries), ANCR (4 points), GBIX (fractional trades)
Under $100 - ADAP (19 points), SAPE (no trades), HGSI (4 points)
All - NSOL (7 points on breakouts and 15 points on reversals), VERT (13 points), CRA (range bound, 15 points on reversals)
Knowing where to expect, and capitalizing on, reversals is a key profit making tool in the daytrader's arsenal.
Whipsaws can happen in choppy markets and traders should always step away from the trade or give themselves more distance from the original entry boundary when a reversal occurs (such as adding one point to the reversal side of the trade entry boundary) to reduce the effect. Losses are a fact of life, but they can be easily kept to a minimum while maximizing your profits with proper stop management.
Recognizing that a mere one point per day profit when trading 500 shares (or 5 option contracts) is $120,000 per year, you begin to understand the potential for profit in applying Trade Prospector's information.
Copyright 2000, by Third Millennium Trading. All rights reserved. This information is proprietary and reserved for the personal use of Trade Prospector users and registrants. No other use is permitted without the express authorization of Third Millennium Trading.
Disclaimer: Third Millennium Trading does not recommend the purchase or short sale of any stocks. Trading should be based on your own understanding of market conditions, price patterns and risk. The information presented here is designed to contribute to your understanding. Controlling risk through the use of protective stops is critical (more).