Yesterday, we set up the short on the Dow Industrials and the S&P 500 Index on a swing trade basis. Although the triggers were not hit during the day, our analysis has not changed. The swing trades can be done on the $INDU ($DJX puts), $SPX ($SPX puts), DIA (or DIA puts) or SPY.
In fact, the markets traded in an extremely narrow range to form a doji, and I'm sure it must have been what traders call an NR7 day, the narrowest trading range day out of the last seven. They are looking for breakout conditions today, and we'll see if they can capitalize on the CSCO catalyst and take out last Thursday's low.
Since the market is poised to often gap down here, traders will be forced to initiate any potential swing trade on an intraday basis. Good thing I wrote the instructions just in time! If you are a new subscriber, don't forget that we have a number of articles in the Knowledge Base on swing trading principles.
When I surveyed the stocks earlier in the week, a number of them were already in what I would call full scale reversals. For example, AMZN breached a big swing low on the weekly chart in yesterday's trading, and is now sitting on that "last stop", the 200-day MA.
A number of the stocks that investors fled to safety such as GE, have formed that telltale head and shoulders top on the daily charts. While it is a tiny one, I'll admit, it doesn't change the fact that it's sitting there for all to see. Will they come back for one last dip, or will they get pulled down by the weight of the market? This is about the last question we have here. Since there has been so much commonality in the market, we might as well trade entire indices instead of trying to pick one stock here or there at this time.
04.02.04 08:50 #