Daytraders Ride the Month End Mark-Up

Kevin Haggerty is a full-time professional trader who was head of trading for Fidelity Capital Markets for seven years. Would you like Kevin to alert you of opportunities in stocks, the SPYs, QQQQs (and more) for the next day's trading? Click here for a free one-week trial to Kevin Haggerty's Professional Trading Service or call 888-484-8220 ext. 1.

The Generals did a good job yesterday of taking out the previous bull cycle closing high of 1527.35 (3/23/00), and closing it at 1530.23. It was a +0.8% day across the board for the SPX, $INDU, QQQQ and $COMPX. NYSE volume was 1.56 billion shares, with the volume ratio 79 and breadth +1309. The energy sector led with the OIH +2.3%, and the XLE +2.0%, followed by the XBD +1.5% and the XLB +1.2%. The month-end markup pushed the strong sectors higher, as energy, commodity-related stocks and brokers are the leaders year-to-date. The XLE is the leading sector SPDR year-to-date, while the XLB is a close second.

However, it was also a very trader friendly session for daytraders, because the SPX futures were -8.75 points in the pre-market Globex, for no other reason than the foreign market nonsense, and that resulted in a discount NYSE opening, which set up the 1st Hour reversal strategies (1st Hour Reversals Module). There were RST setups in the SPX, DIA, IWM, and QQQQ, with entries on the second bar. The SPX hit 1510.06 on the opening bar, and the SPY RST entry on the second 5-minute bar above 151.56 ran to 153.53 before closing at 153.48. The QQQQ was 46.53 to 47.20, IWM 82.68 to 83.82, and DIA 134.60 to 136.31. For those that trade the futures, the SPX emini traded from entry above 1514.50 to a 1534.75 high, and closed at 1533.75. There were also equivalent in the other index futures. The major indices made their intraday lows on the opening bar, and never looked back. Most of the energy stocks broke out of contracted volatility patterns just before 11 AM, and for those of you familiar with the strategies, you know it as the 1st consolidation breakout to new intraday highs.

Today is the last trading day of the month, about the only time the regulators care about the generals and hedge funds marking up their portfolios, so I don't expect a repeat from yesterday. The last magnet is the 1552.87 all-time SPX high, and we should expect that to fall before the inevitable bear market begins, which is long overdue on a historical time basis. It is also not very reassuring when you read that the major banking firms are aggressively hiring distressed debt bankers and traders at the fastest pace since 2002, and that the risk premium on US junk bonds is at record lows. In 2000, it was the Internet Bubble, and this time it could be the leveraged debt bubble that is the catalyst for the next bear market.

Have a good trading day,
Kevin Haggerty

Check out Kevin's strategies and more in the 1st Hour Reversals Module, Sequence Trading Module, Trading With The Generals 2004 and the 1-2-3 Trading Module.