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 February 12, 2004
Commentary-
The intraday action in the market has been
very poor, in my opinion, the last three days. I've mostly been standing aside,
waiting for something good to fall into place. It's very, very important to be
patient when the setups just aren't there.
In the meantime, let's look over
two things today, one I mentioned once a little while ago, and one new one.
We'll start with the one I had already brought to your attention, the ZB. Let's
go to the 60-minute chart, showing the groupings and what has happened since
the ZB hit the area.
Recall that I felt the 'fundamentals' implied
that these groupings wouldn't hold. That didn't mean that they wouldn't be good
for a trade, it's just that ultimately I think they will fail. If they don't
fail, I think that it's going to be a fun economic time for all of us, and yes,
I'm being sarcastic.
Note that wild spike highlighted by the arrow. That's
why I never trade when a big report or fed meeting announcement is due.
Granted, there was an electronic platform issue here (or so I have been told),
but regardless of that, I wouldn't have been in when something like that is
likely to take place. So, outside of the spike, what's the assessment?
Again, the
grouping technique with the ABCD pattern pointed to a significant area where
something happened. The ZB has moved over three full points since it reversed
off the potential trade area. Notice how accurately the first grouping
pinpointed the reversal area. I posted this setup in the commentary right as
the ZB hit the first grouping (although I built the grouping a bit before
that). Also notice that it's a funny coincidence how the spike went right to
the lower grouping. Very odd, huh?
What I want to note here is that there have
been many opportunities to trade this issue based on the pattern/groupings that
I showed back on January 29. Although the ride has been very wild, the bias off
the grouping has been very clear.
Let's move on to a very nice setup that has
started to play out in SUNW. Yes, I know SUNW is just a $5 stock. But it used
to be a big player, trades very harmonically, and traded almost 63 million
shares today! It's another one like VTSS that I like to play around
with.
Several days back Scott over at Harmonic Trader e-mailed me and
said it looks like one of my 4-Point Continuation Patterns is
setting up in our friend SUNW on a daily. Although I didn't like the little bit
of congestion to the left of the pattern, I thought it was a real nice setup.
Let's look at the daily chart of SUNW at that point.
Looks a little scary at this point, doesn't
it? That's why a critical part of the plan is to wait for an entry trigger.
That's especially critical with this pattern; in fact it's downright mandatory.
This is not a 'fade the entry' pattern. Those that have the article on
this should be able to clearly see the potential opportunity right here. If you
don't see the pattern, I can see how you wouldn't even be thinking about a long
right here.
I felt that the
Pattern Trade Entry Technique was a good choice for an entry trigger
here, although many other techniques from Kane Trading on: Entry Techniques
would have worked quite well, too. Let's look at the 15-minute chart, to see
what happened from this point. I'll highlight the area where the 'Pattern Trade
Entry Technique' triggered an entry.
So what looked like a sure-fire short, with a daily close right on
the low of the bar, turned out to be a wonderful opportunity pointed right out
by a pattern once again. The arrow points to the entry trigger area at $5.18.
Notice the nice pullback right after that to allow for other entry trigger
choices. This one set up and triggered so nicely that it was borderline
ridiculous. Not all trades make it this easy on the trader.
Keep an eye
out for this pattern. If you don't have the article, give serious thought to
getting it. It's quite an interesting pattern, and since it is so newly
released, very few people are watching for it. It is, perhaps, the one thing
that I wish I hadn't released.
No changes in VTSS, FDX or FISV. The next
commentary will be the weekend edition, posted Sunday.
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