TUES. NOV. 11- Beware The Middle

On October 27, the Dow hit a low of 8144. On November 4, the Dow hit a high of 9654. In the last two days, the benchmark average traded in a range of 8700-9100. A broader range of approximately 7850-9800 is in effect if one goes back a couple more weeks. For day traders, there are two conclusions to draw from these numbers. First, volatile trading continues to rule the roost. Second, stocks are by any reasonable measure in the middle of a wide range. Let’s focus on the latter tenet. Momentum traders- which let’s be honest- all of us at Protrading Network ate glorified momentum traders- tend to focus upon new highs and new lows for their action. When stocks are in the middle of an intra-day range, the good traders tend to stay away and not force things. When the market as a whole is in the middle of an intermediate-term range, action tends to slow. This is yet one more reason why volumes have dropped off significantly in the last couple or three weeks. Namely, traders are not sure with any conviction which way the market will next break. It makes things that much harder for day traders when the market lacks direction because how do we know where the next momentum wave will be? So, particularly as we head into holiday season/holiday trading toward the end of this horrible year for sock market performance, realize that there will be increasingly less to do. Thus, you must must must hit the spots on the trades you want to do and avoid the temptation to push buttons when there is nothing to do. It is the difference between making a paycheck for a day and losing a week’s salary in many cases. This is also why the watch lists and blog lists will likely shrink in coming days so, again, use extra caution and please be prepared to not trade quite as actively if we meander amidst the middle of a trading range on further decreasing volume.

Overnight, markets throughout the world fell on recession fears. Asian and European markets are all down 2% to 3% across the board. Oil is near an 18 month low as the $60/barrel level is encroached. State-side, futures are weak. Volumes will likely be very light today as the Veteran’s Day holiday is a conduit for many closings today, most relevantly the bond market. Basically, look for the markets to stay down much of the day with attention focused upon individual issues like Goldman Sachs (GS). Again, trade will be thin so exercise caution.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

AXP- got ‘bank’ designation from the federal government

PPG- on “Mad Money” last night

OPTR- soaring on positive drug news

VOD- good earnings


Bad-

GS- closed off of its intra-day bottom, but broke to a new downtrend low

ALD- closed near its low on wretched earnings; likely a short through 3.80 when/if

USG- new downtrend low…12.50 may be spot to short

PLD- closed near low; looking to short thru 7.60 if it opens above there

FMCN- abominable earnings

SBUX- missed its estimates and warned

SGMO- issued disappointing drug study results

AMAG – smashed to a new downtrend low yesterday

NNBR- broke to a new downtrend low…down 60% in days…looking to short at 2.15 or below if it gets there

LVS- missed earnings; noted they have new financing coming yet didn’t disclose how they will get it

BIG- very weak yesterday

HCN- weakest among the healthcare REIT’s yesterday

GNW- because their debt ratings were cut, they are not eligible for assistance under the current TARP program.

GGP- says debt maturities are a going concern doubt

Earnings:


TUES NOV 11 BEF

FOSL TJX TYC

UGI VOD



TUES NOV 11 AFT

CNQR HOLX MELI

MSFT NTY PBR

RAH






Good luck today.