Thursday, June 23, 2011

Tough Swing Trading Conditions Remain, But Bulls Still Have a Chance

In my last post, I discussed how the follow-through day on Monday gave the bulls the opportunity to move this market higher if they chose, but that the indices also had some overhead resistance to deal with and that could make things tricky.  "Tricky" is certainly a good word to describe the past two sessions.  Yesterday we saw some nice consolidation early in the session, but the final hour action was very poor.   Today we saw an awful open which took the Nasdaq below the lows of Monday and in my mind made the follow-through day "dead" so to speak, but then the market rallied hard and closed up for the session.  So where do we go from here?

To be honest, I don't know.  Based on the bounce back today, I will give the bulls the benefit of the doubt here, and if they can get the Nasdaq about the 2700 level, then I think we're looking at a rally.   Who knows how long it will last, but it might be worth playing.   There are a few setups that I see which might be worth playing, but I saw the same thing Monday and that didn't work out well. 


This is a really tough swing-trading market right now because the volatility and news are setting up whipsaws all over the place for both shorts and longs.  I went into Wednesday with four long positions - I was stopped out of three yesterday and one more today.   I was in ZAGG from $12.60 on Tuesday but got stopped yesterday at $13.40.  When it gapped up, it immediately gave it all back in the first half hour of trading and looked very toppy.  It of course righted itself and then went much higher, but unless you are willing to give stocks a lot of room to move around right now, swing trading is still tough.   I am guessing I am not the only trader to have been whipsawed around mightily the past two sessions.

Here are some of the charts I will be watching tomorrow, but I am playing things very close to the vest here.  Ideally, we would see a day or two of quiet trade which would allow some of these charts to set up just a bit better.  The chances of that actually happening however seem small.  The market is still in a position where it needs to prove itself to me, and I'll wait for it to do that.  No reason to be aggressively anything right now - there will be plenty of time.   I am going to limit myself to only one or two names and only add more if I see profits in the first ones.  

All Charts from Telechart, Courtesy of Worden Brothers, Inc.

Good luck Friday - it's been a crazy week and I for one will not be sad to see it come to an end.   Take care.


Anonymous said...

hi mac
this is it, a follow-thru correction after yesterday intraday comeback. if there is no new low today, then i will probably start doing longs but will keep overnite position to be minimized.

big gap-down (yesterday) is an opportunity for longs; minor down and gradually declines minutes after minutes is a scary bearish sign (1jun11).
if i find obvious top divs b4 day close, i will change my mind.

Anonymous said...

hi mac
something not good on minute chart, so longs abandoned but changed to mini shorts.

hope i translated the right signal.