c03 JWBT016-Busby September 30, 2008 14:23 Printer: TBD
Opening the Vault with Key Numbers 43number. Believing that the $100 price could not be broken, I hung with the
trade. Much to my surprise, the $100 was easily crossed, and that Merrill
Lynch bull started charging. I was losing money hour by hour but held on,
believing that a reversal was minutes away. I was certain that the mar-
ket would vindicate my play and the price would fall. With each up tick
my pain grew more acute. Finally, as the $110 price was in sight, I yelled
“uncle,” admitted defeat, and closed out my position with a significant loss.
When it comes to IBM, Microsoft, Coca-Cola, or any other blue-chip stock,
beware of the power of 100. If $100 is broken to the upside, you may want
to look to buy. At least, I would not want to go short at that price point and
suggest that you not do so. Either stay out of the market or consider a long
play. Let me be more to the point—buy at $100 and sell at $110.PEARL 5
When a stock crosses the $100 price, it will typically go to $110. This also works
for stocks crossing the $200 line.Key Numbers in Metals, Fuels, and Commodities
When my first book,Winning the Day Trading Game,was published in
2006, crude oil was hovering around the $50 per barrel price. That $50
price was huge and it was a big key number for that particular market. I
remember watching that number carefully and planning to buy crude if the
$50 mark was broken. As we all know, for a number of reasons crude shot
above the $50 mark. Then $100 became the next huge resistance level. It
seems like ancient history now but I remember analysts speculating about
oil prices and arguing about whether oil could or could not cross that $100
barrier. I take my hat off to T. Boone Pickens. When everyone else was
saying that crude had topped out at $50 per barrel and was heading south,
Boone alone argued for higher prices. Oil is now trading at record highs.
At this time, it is around the $120 area. Can we see $150? As I make money
trading crude, I thank T. Boone, the man who leads the charge for the bulls.
Figure 3.4 depicts oil’s rapid rise across the $100 mark. It is a daily chart
for crude futures and shows the meteoric rise of this scarce commodity.
Notice that on March 20, 2008, crude had a low of $98.60. The $100 level
served as support for the market and oil held around the $100 level. Unable
to move down, it moved back up for a few days and then tested that $100
level yet again. However, within a few days, the bears relinquished control