How Many Of These 3 Trades Did You Take?
What Thursday’s Action Tells
You
The market action was very accommodating to
certain traders yesterday as the early decline into the 10:30 a.m. ET time
period set the stage for the First-Hour strategies. There was a contra move,
and
then price resumed the direction of the down opening as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
made the intraday low at 1062.82, closing at 1063.23, -1.2% on the day. The
Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating), 9815, was also -1.2%, while the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) at
1752
and
(
QQQ |
Quote |
Chart |
News |
PowerRating) at 32.80 were -1.7% and -1.4%.
NYSE volume was the same as Wednesday at 1.41
billion, except the volume ratio was just 13, with 1.21 billion shares down
and
183 million up. Breadth was -1332. After all the noise the past four days,
the
SPX is exactly flat coming into today’s trading.
The leading red sectors were the semis, with
the
(
SMH |
Quote |
Chart |
News |
PowerRating) -2.7%,
(
CYC |
Quote |
Chart |
News |
PowerRating) -2.1% and
(
OIH |
Quote |
Chart |
News |
PowerRating) -2.1%. The
(
TLT |
Quote |
Chart |
News |
PowerRating) gained
+0.2%, and the technology sector declined, but the defensive drugs and XLP
were
also on the red side, unlike Wednesday.
For Active
Traders
The wrong chart was posted by TradingMarkets
yesterday morning, but was corrected soon after 9:30 a.m. I have included it
again today for those of you who didn’t return to the commentary page after
the
initial posting.
You were told to anticipate the extensions of
the
SPX 1069.86 – 1077.32 leg, and that came into play yesterday as the SPX made
a
double 1067 low into the 10:30 a.m. bar. The 1.272 extension of that leg was
1067.83, and the bar after the second 1067 low was the 21st bar from the
1077.32
high. These 1067 lows also put you into the volatility band zones, which are
outlined in the chart, in addition to the very common 10:00 a.m. – 10:30
a.m.
reversal period for the initial contra move.
This contra move traded up to 1071.21, the
.50 –
.618 retracement zone, and then resumed the direction of the open. The
“90% –
60%” rule was in play once again. The gap pullback (see your SPY and
ESU4
charts) to 1071.21 then reversed the 1069.86 low, trading below all of its
EMAs
and taking out the 1067 low, and then made a tradable 1062.82 intraday low.
This
low was at the 2.0 extension level and also to the midpoint of the -1.5
and -2.0
volatility bands. The reflex up ran to 1067.76 and the 60 EMA before closing
at
1063.23.
Net net, there were three excellent entries
(two
long, one short) for those of you familiar with my strategies and the
sequence
tools that make the trade higher probability situations.
Today’s
Action
Yesterday was the eighth trading day from the
last SPX swing point 1108.60 high on 08/02 following the July month-end
mark-up.
It is also the 34th day from the 06/24 1146.34 primary swing point high, so
any
early red in the major indices can result in a reflex up ending the week.
This
corner prefers not to sell any continuation new lows in the first hour and
would
rather play the long Trap Doors should price go early red.
Have a good trading day and a great
weekend.
Kevin Haggerty
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