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Market View: Trading Range

October 21, 2008 4:34 PM

confusedgraph.jpgI mentioned that the volatility should calm as we have very clear highs and lows until one clears. Therefore, while we still see intraday swings of 200-300 points, we are not seeing up and down 600-700. The ranges are as follows, IMO.

Dow: Key Lows 7773 and 8176 and High 9924

SP500 865 low and 1044.31 high.

(I do not consider the absolute low for the SP as important as 865 for a variety of reasons)

Until we clear one of these numbers, we will continue to trade between them and volatility will likely continue to narrow.  If we do clear the lows it is not a given that the market will meltdown immediately as we still have the 2002 lows that may hold. Maybe. Traders will be looking at them for certain.

At any rate, the point here is you will have to be choosy in picking stocks in the environment and will most likely have to watch intraday charts for direction. We are either building key support in this 950-985 range or we are building key resistance depending on which way the market breaks here.

With all that said, I have also mentioned that these moves higher appear to be a house of cards and likely short covering. We have never made any intraday lows that I like on these moves higher and if we get bad news the only thing to stop the fall are moving averages and daily highs/lows.  If we spikedown here, we have to make firm intraday lows to be long as I see things.

Written by Tom@StockBlade.com · Filed Under General Investing/Trading Commentary 

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