Did You Take The Slim Jim, Trap Door And Both RSTs?

It was a choppy Monday following option expiration, but the daily travel range for the major indices was excellent for daytraders. The SPX ($SPX.X | Quote | Chart | News | PowerRating) daily range was 14.6 points as the SPX closed at 1178.57, -0.3%.

The Dow closed ($INDU | Quote | Chart | News | PowerRating) at 10,476, -0.4%, the (QQQ | Quote | Chart | News | PowerRating) virtually unchanged and the Nasdaq ($COMPQ | Quote | Chart | News | PowerRating) +0.2%.

NYSE volume was 1.37 billion shares, the volume ratio 42 and breadth -449. The market came into the day in a short-term overbought condition with the 4 MA of the volume ratio 65 and 4 MA of breadth +1016. The mid-point of the November 11-day SPX range is 1178.18, so Monday's close is right at it. The 5 RSI is 53 and in a downtrend as price has been moving sideways between 1188.46 - 1167.89. The closing range is 1184.17 - 1170.34.

The RTH led the red primary sectors at -2.0% and closed at 98.15, just below its 20-day EMA of 98.54 after a nine-day retracement from its rally high of 102.15 which was at an extended longer-period standard deviation band. The RTH had broken out to a new 52-week high above 96.15, which is now a first support level.

The (OIH | Quote | Chart | News | PowerRating) closed at 86.24, below the 86.95 low of the rally high day with an 87.93 high on Friday. Daytraders have cashed in on this +15% move over the past 13 days from the 89-day EMA retracement and 76.67 low. The 20-day EMA is the first EMA down at 82.87. The (SMH | Quote | Chart | News | PowerRating) also closed red at 33.03, -0.7%.

For Active Traders

It was a textbook day for sequence traders who utilize my strategies. The gap-up opening for the major indices got it going. The (SPY | Quote | Chart | News | PowerRating) gave you an RST/Trap Door short below 118.85, which then reversed the 118.79 opening. The SPY traded down to 118.42 and into a 118.64 - 118.42 Slim Jim at the lows. The breakout to the downside was to 117.49, which set up the RST buy entry above 117.64. The 117.49 SPY low corresponded with the SPX 1172.37 low which was right at the -1.5 volatility band of 1172.23. That RST setup just said, "Buy me." After entry, the SPY ran to 118.68 before reversing again to a 117.81 close. It was impossible for traders not to be involved if you are familiar with the different strategies from the modules.

There were similar setups for the (DIA | Quote | Chart | News | PowerRating)s and a +19.5 point NQZ4 RST short below 1588 which hit an intraday low of 1568.50.

Today's Action

It is the last trading day of the month, so I expect more programs both ways, the same as yesterday. That should give traders some decent travel range to work with.

The DIAs closed at 104.47 after reversing the 104.09 20-day EMA with a good RST long entry above 104.19 which carried to 105.17 before the 104.47 close. The DIAs are seven days down from the 106.26 rally high, so any weakness on Tuesday back to the 20-day EMA could bring in a few buyers.

The SMH closed at 33.03, which is the 20-day EMA with the 200-day EMA above at 33.82. Yesterday's price action reversed that 200-day EMA after a 33.81 intraday high on the 9:35 a.m. ET bar, trading down to a 32.92 low. That was a low common denominator short entry with a stop just above the 33.82 200-day EMA, which is obviously a good risk/reward trade.

This is being done Monday night for Tuesday.

Have a good trading day,

Kevin Haggerty

PS Trade with Kevin for a year. Click here for details.