First Hour Strategies Prevailed Yesterday

The SPX ($SPX.X | Quote | Chart | News | PowerRating) traded in less than a 5 point range until 3:00 p.m. ET and then declined about 5 points into the 1163.75 close, -0.3% on the day. NYSE volume fell off to 1.49 billion shares with the volume ratio 34 and breadth -714. This made the short-term condition oversold based on the 4 MA of the volume ratio now 30 and 4 MA of breadth -696.

The technology sectors had the (QQQQ | Quote | Chart | News | PowerRating) at -1.4% to 36.53 and the Nasdaq ($COMPQ | Quote | Chart | News | PowerRating) at 2009, 1.3%. Leading the primary sectors downside was the (SMH | Quote | Chart | News | PowerRating), -1.7%, and the RTH, -1.0%, while the brokers, XBD, and bankers, BKX, finished small green, along with the (OIH | Quote | Chart | News | PowerRating), +0.8%.

The only travel range in the major indices occurred in the last hour, assuming you traded the break to new intraday lows (not in this corner). When the indices go sideways, scrolling for individual stock setups is usually productive for daytraders. One example is (GE | Quote | Chart | News | PowerRating), which has been trading in a nine-day range between 35.98 - 35.07 prior to yesterday. The 50-day EMA is 35.74 and the 89-day EMA is 35.20. GE is also oversold and in an uptrend, the same as the SPX.

If you were scrolling your "Above the Line" stocks yesterday,  you should have been alerted to the GE Trap Door on the 10:00 a.m. bar which made a contra move to the 35.70 and the 816 EMA after a 35.03 entry level. Not bad for a stock that doesn't have a large daily range. (See both GE charts.) GE declined from the 816 EMA to 35.24, which is the .618 retracement to the 34.96 low, so the stock becomes a focus again this morning, depending on how the early green futures hold up.

If you are prepared and understand the basic strategies for First-Hour trading, there were many other opportunities like GE yesterday on a day that was not major index friendly.

I actually turned the sound up on CNBC this morning in a weak moment, and the media hype about "better than" and "worse than" a penny according to the analysts' estimates was in full bloom. All of a sudden, as per the media, what the analyst says has meaning, but of course,  you remember these same analysts following stocks down from the 2000 top and wrong all the way, and even the media turned on them. However, now that stocks have been in a bull cycle, the analysts are reborn and the absolute word once again. Also, you do remember how many of the major brokerage firms' portfolio strategists were fired just about at the bottom of the last October 2002 lows. You will see the same thing happen in this cycle, and the retail investor will get caught once again as the analysts disappear all the way down to the next cycle bottom.

Have a good trading day,

Kevin Haggerty