· Scalp stocks that are highly liquid (average volume over 1 million/day)
· I like the 3 minute, 3 day intraday chart as the primary tool for determining entry, targets, and stops.
· Look for volume moves and resistance support levels.
· Think about your commissions.. Scalping all day can break the bank once you pay your fees and commissions. Scalping is generally beneficial to larger trade blocks, but you MUST exit the trade the second it fails.
· Practice, practice, practice
If you step back and look at the larger picture today, you’ll see that we’re still in my Red Zone – the area of few trades and extreme caution (see my last blog for more on this). The good news, is that the market was up today AND we saw improving volume – not too significant, but noticeable.
It looks like the highly discussed 1040 on the SPX WAS the magic number. As soon as we pulled back to 1040, it rebounded back up. Is this a reversal? Time for a bull move? It’s too early to say, but it was definitely a good start. 9800 on the DOW and 1040 on the SPX are still important support levels to watch tomorrow. In the meantime, I’m not going to change my trading strategy while we’re hanging out in the red zone.
Look for a few charts from my twitter stream tonight – setups for long trades just in case the move continues bullish.