What’s
going on today?
The Nasdaq has been doing well based on the Microsoft
(MSFT)
news. Most Nasdaq stocks gapped up with the majority
of the gains coming in the morning, which is typical
of what we’ve seen the last several days. If you are
very selective and get in and out quickly, you can do
OK.
It
sounds like you’re sticking to day trading fundamentals
to deal with the choppy markets.
There are a lot of pockets of selling strength. The
tick has been negative for the majority of the day today,
so most stocks are trading on down ticks rather than
up ticks.
When the markets are in a transitional phase such as
right now, things that worked two months ago don’t work
now. You have to recognize that it has changed and roll
with it.
It is important to be able to recognize that things
change. There are times when there are home runs out
there to be had, and there are times when you have to
take small profits and let them add up over the course
of the day.
A day trader is someone who has to be flexible and roll
with the market. If you want to be opinionated and argue
with the market, it sticks its hand in your pocket and
empties out your wallet. It will do that every time.
That
said, you seem somewhat more positive than other traders
we’ve talked to. Why?
One encouraging thing is the strength in financials.
The bank stocks have reacted really well of late. One
stock I’m looking at is Citigroup (C),
which is at its resistance level. If it can continue
to move ahead, the market might buck that head-and-shoulders
formation we saw earlier.
We
talked about the head-and-shoulders technical formation
last time we spoke around the end of September. Has
your opinion of that usually bearish technical data
changed since then?
What I told you when we first talked about it was that
these patterns often fail. You just take it day by day
and see what is happening. The market has stabilized
over the last few days and bounced. We’ll see if it
can last.
What
specific strategies are you using to trade?
We use support and resistance and a couple of simple
moving averages. We’ve been making a lot of use of a
short-term scalp where we look for stocks breaking ahead
in the morning and gapping up.
Network Associates (NETA)
did that this morning. NETA had gapped above its 20-
and 200-day moving averages on the five-minute chart.
When it started to move up, we entered. Our target was
its 200-day MA on the 15-minute chart. It got there,
and we got out. We see this happen on a daily basis.
These are the type of things that we teach in our seminars.
It is very reliable. We’ve used this for so long, that
it has become second nature.
Greg Capra, who has more than 10 years of day trading
experience, is president of Pristine.com (www.pristine.com).
