Here’s How The Locals Trade
They key off intraday highs and lows. Sound simple?
While this strategy is not appropriate in all market conditions, if you
sold S&P futures today when they reached yesterday’s high and then
bought them back at this morning’s low, it probably seemed simple. Many
times, locals in the Chicago Mercantile Exchange’s S&P 500 futures pit
look to sell intraday highs of the day, prior day’s high, or at significant
highs. Conversely, they look to buy intraday lows, at the prior day’s low,
or at major lows.
Pit veterans Lewis Borsellino and Bill Greenspan (no relation to the Fed
Chief), in Marder and Dupée’s The Best: TradingMarkets Conversations
With Top Traders, available at
TradersGalleria.com, both mention they look to sell or to buy at such key
highs or lows.
The high in the S&P futures
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with yesterday’s high and closely with a 20-day high that has been a pivotal
area in this market for weeks: the 1228 handle.
The S&Ps piggybacked on a rally in tech, following Merrill Lynch’s
upgrade of the semiconductor sector
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before closing up 4%. The spooze
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right away, but then trailed by about five minutes gains in
Nasdaq 100 futures
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pace.
On the five-minute bars,
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move above the high of the pullback from opening bars served as another potential
long trigger, with a close above the 1218.00 lap acting as confirmation of
the double-bottom intraday reversal pattern.
The
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yesterday’s 1227.50 high, before cascading back down to the intraday low at
1216.00, where it quickly retraced 50% of the slide and continued tracing
higher intraday lows. A six-day pattern of higher highs and higher lows is
now intact. The 6.20 close higher at 1221.50 in the SPU1 belies a much wider
intraday move that swung more than 25 handles off the key lows and highs.
Nasdaq futures finished up 45.00 at 1738.00.
Key intraday triggers are noted in the chart below (available on the
TradingMarkets Website).
Also, if you would like to read more about how locals trade, see Lewis
Borsellino’s S&Ps Trading Course and Dupée’s “In
The Pit With Borsellino“
article.
T-bond futures
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key highs; just shy of yesterday’s nearly four-month high. This morning’s
National Association of Purchasing Managers report, although on the low end
of expectations, showed excess inventory at its lowest level of the year,
suggesting the inventory overhang may be drawing to a close and that with
the fat cut, manufacturing activity may soon perk up.
T-bond futures rallied after gapping down on the open, but hit overhead
resistance at a point specified in Levels From The Bond Pit.
From the Pullback
From Lows List, orange
juice
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short. This is the fifth straight down day in juice, which closed down .85
at 78.55. Notice the double tops and the outside day down on July 26 that
was followed by a gap down on July 27 which communicated its downside
momentum.
In the currencies, Canadian dollars
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a gap-up to new highs also met selling pressure by locals in the CME’s
currency pits, at least initially. Euro FX futures
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Swiss francs
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staged a reversal of the reversal — off yesterday’s high — to both close
at two-and-a-half-month peaks. Swiss francs are set up in a cup-and-handle
pattern as well. ECU1 added .00600 to .88020 and Swiss francs added .0052 to
close at .5842.