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Mix-Ansicht- Einschätzung von Ed Downs für heute zum DOW - Bill, 05.03.2001, 14:32
- ...und zum Nas. Comp. - Bill, 05.03.2001, 14:34
...und zum Nas. Comp.
A Wild Day
Huge gap at the Open is followed by two clear, trending moves. Now, above a significant line at 2,100 and potentially poised to rally.
From yesterday's commentary,"...In the Short Term, we should see a pullback Friday. The market moved too much today, and it needs to retrace... In the medium term, I don't think we can do much more than wait it out, and see if a higher low forms. With the market going near vertical in the last hour of trading - an uncharacteristic move in this environment - I am leary of it and want to get some justification before jumping in. We want to see the market pull back 20 to 50 points, and turn back around."
Wham! How is that for a drop at the Open? It's rare that you see opens like that. After the initial 80 point sell-off, the market regained composure and rallied the rest of the day, with the"magic" 2pm EST time casting a spell to the Close. Yesterday, I suggested trading the trendline breaks because today would be a slippery proposition at best. We had a great one at 2pm, good for 60 points to the downside.
There is a lesson here I want to point out - whenever a market goes straight up like it did Thursday afternoon, that is a big warning sign. Markets don't normally do that, which is why I was so cautious posting for today. However, Monday is a different story. We had a very orderly rally/retracement cycle today, so the next session is setting up to be a"normal" one. How so? I would expect the NASDAQ to start rallying immediately off the 2,100 line. If it does, THAT will be the buy point. Hold your mental stops at 2,100 and hang on.
Short Term NASDAQ
In the short term, I don't see how this market can do anything but rally at the Open. And, if it does, get on board for the likely 50-75 point run. You can see the two, beautifully straight trends that formed today. These kinds of trendlines are very easy to trade, and I think we will see more of them Monday. Trade the upside break, and set your stops at 2,100. Or, if we drop, go with it until the upside break happens (that is, through the trend line in the 5 Minute Chart across highs).
Medium Term NASDAQ
In the medium term, we are early, but I am going to recommend getting on the train at 2,100 IF you can watch the market during the day. Please don't just load up on NASDAQ stocks over the weekend. We are not out of the woods yet. But, if you look at that 15 minute chart, you can see the reasonably clear case for a reversal off the 2,100 line. If we get it, that will be a fairly low-risk entry - if you hold tight stops. If we push off the line and then move sideways, that will be very bad news, and we will go short again on the drop of the lower boundary.
Summary:
Today's drop at the Open was, in my opinion, quite predictable, based on the uncharacteristic rally we saw yesterday. No way that thing was going to keep on going like that. Now that we have had another day of up and down, we are starting to see the semblance of a normal market. A nice, smooth rally off 2,100 will be just what the doctor ordered to get this market kicked back in the right direction. Of course, we are right at the lows - so if you play the game, you have to protect yourself. Hold those stops at 2,100.
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