This trading strategy helped catch the energy rally
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?
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It was a no decision day yesterday, as the SPX (+0.2) traded
in a narrow 3.5 point range between 1403.49-1400. $INDU was essentially
flat at 12319. NYSE volume was 1.52 billion shares with the volume ratio 63 and
breadth +786. There has been no selling pressure following the expiration,
and the seasonal bias is up today and Friday. Liquidity will be thin and there
will be more random price movement than normal on less volume. The market
is closed Thursday and will close early on Friday, so if traders don’t get
something done this morning, it is better to take off and come back on Monday.
Next week will bring us a month-end mark-up action by the
generals and some larger hedge funds. The monthly performance to-date for
the SPX is +1.7% and +12.3% year-to-date, so you can bet that they will try not
to let much of that slip away through year-end. The SPX angle of advance
since July looks like a silver or palladium parabolic spike. It is even
sharper than 1987. These kind of angled moves usually end with similar
spikes to the downside. The PPT (Plunge Protection Team) did an excellent
job accelerating this move. In last Friday’s commentary, we anticipated
the energy stock reversals, and it was an excellent day for traders. In
Monday’s (11/20) commentary, we said that the current energy stock retracement
from the 11/15 142.22 intraday high will continue to provide opportunity for
daytraders, and that was exactly what happened yesterday. There were many
of the regular strategy entries (5-minute charts) in stocks like ECA (1st
Consolidation Break Out), XTO (Flip-Top), RIG (1st Consolidation Breakout) and
NUE (50% Gap Pullback), to name a few. These strategies are all explained
in the 1st Hour Trading Module. There is no energy reversal advantage
today after 3 straight up-days for the OIH from 133.75 to the 140.19 close
yesterday. Any continuations today carry much higher risk.
The SPX has zero edge for traders right here, as this is the
13th day up from the 1360.98 11/3 low, but the month-end mark-up next week will
probably off-set the technicals.
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.