February 18th 2008
Market Consolidation Brings Opportunity
U.S. markets are closed today. For some reason I forgot. I did all my scanning and was all set for today. I checked the news and then it hits me. It’s a good lesson though in that you should be thoroughly prepared for each day. Any market holidays are just extra time for research.
After several weeks of lower prices, I’m finally starting to see the consolidation I’ve wanted. Unfortunately for me, the symmetrical triangle that is forming doesn’t tell me which way the market is going to break. My gut says we’ll see a resumption of the down trend. But in my scanning, I’ve seen several very nice cup and handles, ascending triangles and double bottoms forming in index components. My strategy in all times is to trade what I see. Tuesday will be no different.
Let’s look at the Dow and the Nasdaq.
We’re looking at symmetrical triangles in both markets. I’ll be looking to play either side. Here are two interesting formations for this coming week:
MCHP is one of my top potential longs for this week. This double bottom has been 4 months in the making.
JNPR is also forming an interesting double bottom pattern.
Look, the line of least resistance is down. I don’t like trying to pick bottoms and trading counter trend can be like spitting in the wind. That being said, I see a lot of long candidates right now.
I am enjoying this consolidation and looking forward to putting on more shorts should the market break lower. I also want to stay flexible enough to make money on the long side should the market’s trend reverse.
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4 Comments »
thewild1 on 18 Feb 2008 at 3:56 pm #
Don’t worry I didn’t even know the market was closed today until Saturday.
Jonathan on 18 Feb 2008 at 7:09 pm #
Yeah, I felt all dress up with no where to go.
Options Strategery on 18 Feb 2008 at 8:13 pm #
I knew the markets were going to be closed but I didn’t realize I’d feel this much withdrawl.
MCHP is a great fundamental play too. I don’t believe the ‘blame it on housing’ part of the last conference call so I am a little worried. But other than that, they are a money printing machine in the 8-bit uC market. Their pricing beats Cypress and Atmel hands down. Lean and mean.
Jonathan on 18 Feb 2008 at 8:28 pm #
Hey OS,
I’m very interested to see if MCHP resolves to the upside. Having the technical and fundamental reasons will hopefully put enough buyers in the stock to get it moving.