Friday, July 25, 2003
Issue Contents:
| 08:57 | On Deck... |
| 09:23 | [$NDX, Daily] NASDAQ 100 Index |
| 09:29 | [QQQ, Daily] NASDAQ 100 Index Shares |
| 10:18 | [AMAT, Daily] Applied Materials |
| 17:03 | TGIF! |
Good morning. Today, we're going to go over how we look at market internals, review the top trading stocks and the major stock indices, so that we can be all ready for next week.
[$NDX, Daily] NASDAQ 100 Index
On Wednesday we reviewed the $NDX daily chart, and the potential for the bounce off the 20-day EMA to fail to make new highs. Yesterday's price action showed us that there are definitely sellers up to the 1287 area, and with an open near the high of the day together with a close near the low of the day, this sets up a warning sign, that is actionable as a setup as a swing trade on the QQQ.
[QQQ, Daily] NASDAQ 100 Index Shares
On Wednesday we went over all of the details for the swing trade on the short side. The only new thing today is the fact that the sell stop would now be raised to trigger on break of Thursday's low of 31.08, as we adjust it upward a tiny bit.
Everything else remains the same. Generally we suggest that traders attempt to enter intraday off a 10- or 15-minute chart AFTER the trigger is hit, as a short sale is a hit and run trade at this time.
[AMAT, Daily] Applied Materials
This is a follow up on yesterday's short sale setup on the AMAT daily chart. At this point, both the aggressive and the laid back short sale triggers have gone off, and traders who are short are now interested in setting stop losses in the right place.
As discussed, this is considered an anti-trend hit and run trade, and our approach is to always use the tightest stop loss possible when not trading with the trend. A good place to enter a stop loss would be a few cents under yesterday's low. That's our two cents worth anyway.
After the market did a U-turn on test of the two-day low this morning, I decided what was needed is an explanation of how tests work, and why people keep getting trapped. Will be back to post the transcript from the Real-Time Trading Group later, and you will not be disappointed. Have a good evening.