September 21, 2011
Uncategorized
By Geoff Bysshe
In the trading room yesterday we caught CMG on the long side (up over 6%), today CELG on the long side (up over 7%), and many more huge movers. The number of highly volatile stocks is extraordinary.
While these moves are exciting and profitable they can also lead traders to begin to expect more out of trades and lose discipline. Don't let this happen to you. Follow the rules for stops and targets. If you follow the our OR Success Formula rules you'll have a position on to participate on the huge moves, but also take profits on along the way so days that reverse like today will enable you to enjoy the CELG's while still taking some money out of those that move but then reverse like CMG today.
Tomorrow, Wed.9/21, we'll hear from the Fed at 2:15 EST.
We head into the announcement with the market watch mixed with respect to the pivot stack. The IWM's not only have a negative stack but also closed below the low of yesterday. This should be watched carefully as a drag on an up move just like it was today. It also means we should watch R1 very closely if the markets head higher.
In all markets R1 will line up with the intra-day action around today's high. So OR Reversals at this level should be anticipated, and for stocks with negative stack the 5-min OR Breakdown could be a good play before the news is released.
It's easy to think the markets should sell off after the rally we've seen over the last week, but today's late day weakness could be all the market needed as their pause to consolidate. It also created a situation where in many stocks there could be a good 5-min breakout play tomorrow with a target of today's high.
Let the markets tell you what they want to do and follow the rules of the reference points.
Speaking of the late day weakness...
Yesterday I highlighted how the divergence in the Q's. vs the other markets indicated the low of the day. Did you see the same but opposite pattern today? Twice! Look at how the Q's were the only one to make a new high at 12:00, then at 2:20 right before the heavy selling began, the DIA made a feeble new high with none of the others even coming close!