Volatility Creates Opportunity Today for Daytraders
From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.
The last two weeks in August saw the lowest average daily NYSE volume of the year.
Since 8/4/08, the SPX has been consolidating in just a 3.1% trading range (closing
basis) between 1305.98-1266.07, despite all of the hyped news, and economic reports,
most of which have a life of one day or less. However, during this trading range,
9 of the last 17 trading days have finished at +/- 1.0% or more, so daytraders
have benefited the most, especially in the energy and commodity related stocks.
The liquidity has been thin with the significantly reduced volume, and this resulted
in more volatile intraday moves.
Historically, Sept is a very erratic trading month, and we start it with the
SPX in a 3 week narrow trading range, so you can expect that to be resolved
sooner then later. The SPX closed Fri at 1282.83, and the closing range B/O
is over 1305.32, and below 1266.07, while the current rally high off the 1200.44
low (7/15/08) is 1313.15, so nothing market positive happens to the upside until
that is taken out. The market is obviously not short term O/S or O/B due to
the trading range action, and the SPX is not at a key price zone, but there
are some key time dates this month which I outline in the trading service, that
you can access with a free trial to the service.
The SPX futures are +11 points as I complete this commentary at 8:00AM ET,
the $US dollar ($DXY) is +0.6% to 78.22, and crude oil had an “air pocket”,
and is trading down $7 to about 108.50, so it should be an active trading day.
If the crude decline holds, the energy stocks will have extended gap down openings,
which daytraders can capitalize on from the long side as price gets extended
to volatility band levels, and strategies like the Trap Door and RST set up.
Have a good trading day!
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