Learn to trade in these market conditions - Click here Just Released!
I actually like to re-read books every so often, because I find that each time I re-read a book, I always come up with new ideas or catch something I may have missed earlier. By doing this, I find it helps in my trading and market research.
As a trader, I always look for ideas which I can synchronize with my current trading strategy. What I mean by this is I like to take ideas from strategies that work and combine them with other strategies that work to see if the results produced are more robust. In essence, I like to see if the whole is greater than the sum of its parts.
That is why in my commentary you may see daily and weekly charts, candlestick charts, volume indicators etc. I have found these tools when combined, are very useful in my research and feel they could be of value to you the reader.
The earnings this quarter have really been detrimental to the markets, however we all should remember that the earnings coming out are "rear view mirror" earnings. The company earnings which are affecting the markets are from the last quarter. The test for the markets will be the next one to two quarters of earnings to see if the Fed rate cuts have taken effect and whether they have strengthened the economic environment.
Until that time, we will continue to trade accordingly by adjusting position size and tightening stops on our trades.
Compuware (CPWR) is pulling back and forming a handle. Ideally, I would like to see the handle hold support at around the 20 period moving average.
Jack Henry & Associates (JHKY) earnings have increased on a quarter-to-quarter basis 3.1% to 21.43%; sales have a 1 year growth rate of 16.42%. On a year-over-year basis JKHY has showed a 49% and 59% increase in sales. Volume has been drying up on a weekly basis and notice the positive divergence between price and the Relative Strength line. The company is trading approximately 8% off its high.
Retailer, Bed, Bath, Beyond (BBBY) is trading in a narrow range. It held up relatively well in the session even with the Retail index getting hit during the session. Continue to watch if price is going to test the high end of the trading range. The stock is about 6% off its high.
Turning to the Exchange Traded Funds, among the leaders were the WEBS-Malaysia Benchmark (EWM) which gained 4.6%. The Utilities Holdrs (UTH) tacked on 1.7%.
The Ishares DJ U.S. Utilities Sector (IDU) gained 1.4%.
Funds which traded down in the session were the Internet Infrastructure Holdrs (IIH) which was down 8.2%.
The Telecom Brasileiras Fund (TBH) closed lower by 6.8%. Price found support just above the 4/23/2001 low of 42.55. The fund looks poised to take out that low.
Broadband Holdrs (BDH) slid 5.2% for the session.
Remember that all securities are risky. In any new trade, reduce your risk by adjusting position size and placing open protective stops where you will sell your new buy or cover your short in case the market turns against you. For an introduction to combining price stops with position sizing, see Loren's lesson, Risky Business.
Greg
