Schaeffer's Trading Floor Blog
Stocks quoted in this article:

Following up on the post below...I agree with everything I said below, but I had some hesitations on posting it due to interpretations. At face value, it might be construed that I am predicting a breakout that will be followed by large gains. And while that is a possibility (anything can happen), I think there is too much complacency for it to be that "easy".

Way back in October, I showed the chart below that highlighted the peak in early 2004...


Created with SuperCharts by Omega Research

The abridged text below is from the commentary that accompanied the chart, and fits with the current scenario...

    The point I am focusing on is that each initial peak was followed by at least one retest. On two of the situations, the "retest" actually took out the initial high. I suspect this was enough to draw in the final round of bulls and exhaust the buying pressure....The bulls get drawn in on the "breakout" but this uses up the bulk of the demand...However, the situation above has potential to whipsaw both the bulls and the bears, and that has definitely been the habit of the market this year.

In other words, a breakout doesn't have to "lead" to anything but you never know how much money is sitting on the sidelines willing to chase momentum...that is the point I was hoping to get across...

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Pondering a Post - Part I

by 3/2/2005 1:00 PM
Stocks quoted in this article:

Note - I had typed out the post below and was just getting ready to publish it on the site when a thought hit me...But before I get to that, read what would have been the post, and I will follow up on it in just a minute...

For the record...my personal bias is that risk is not being given its due respect. And from emails I have received, I know that many of you feel the same way. However, what seems "logical" and what actually happens in the market are not always the same thing.

As I was pondering what might happen should the indices start to breakout, one quote keeps running through my mind....

Markets can remain irrational longer than you can remain solvent

~John Maynard Keynes

I know I have posted that before, but I have always found it helpful to keep that in mind along with the old adage - don't fight the tape...


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Chart Chatter - SPX and DIA

by 3/2/2005 12:10 PM
Stocks quoted in this article:

As promised, here are updated charts of the "majors"...

Created with SuperCharts by Omega Research

The bulls bounced the indices from their morning lows but have yet to overtake major resistance, though the fact that the SPX was able to overtake last week's highs hints at momentum. The key now is to see if the bulls can hold today's upside. As far as what a breakout would mean, I covered this yesterday so I won't belabor that...

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Stocks quoted in this article:

With the flurry of buying we saw, I thought it might be worthwhile to check back in on these tech bellwethers...

Created with SuperCharts by Omega Research

As you can see, both have bumped up into resistance but have yet to overtake it. Give me one second and I will post the SPX and DIA...


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Index Check

by 3/2/2005 11:29 AM
Stocks quoted in this article:

As you might have surmised from the post below....

...momentum has shifted fairly dramatically from what we saw this morning. Biotech is bouncing following its recent BIIB/ELN drubbing as Chiron (CHIR) rallies 11 percent after the U.K. lifted a manufacturing suspension.


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