Same First Hour Strategies At Any Level
What Wednesday’s Action Tells
You
The market action turned south after the
10:15
a.m. – 10:20 a.m. ET bar highs for the
(
SPY |
Quote |
Chart |
News |
PowerRating) and
(
DIA |
Quote |
Chart |
News |
PowerRating). The
(
QQQ |
Quote |
Chart |
News |
PowerRating)s
hit their highs on the opening bar, and as you know, all three were marked
higher into the 4:15 p.m. period on Tuesday. Greenspan and some earnings
surprises were obviously not a positive, nor is the focus on oil trying to
break
out of a trading range for the past 24 years.
The good news is that the early rally was
good
enough to get all stops on carryover index proxy or
(
SMH |
Quote |
Chart |
News |
PowerRating) positions to
well
above breakeven and also to ring the register on a percentage of your
lower-cost
positions. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) ran to the 1.0 volatility band level of
1115.93 with an intraday high of 1116.27 before reversing down to a 1093.88
intraday low and close.
The DIA made a 102.55 high just below the
102.64
1.5 volatility band, while the SMH traded up to 33.62 on the opening bar
from
the 32.90 previous close, so the trailing stop was well into the money. The
1.28
volatility band was 33.70. If you played
(
INTC |
Quote |
Chart |
News |
PowerRating) instead of the SMH, it
ran
to 23.54 on the first bar, so trailing stops had been moved to above
breakeven.
The QQQs hit 35.75 vs. the 1.0 volatility band at 35.61 and closed down at
34.40.
NYSE volume expanded to 1.68 billion with the
volume ratio 16, as the down volume was 1.4 billion, or almost the same as
the
average daily volume. Breadth was -1872. The SPX closed at 1093.88, -1.3%,
the
Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) 10,046, -1.0%, and the QQQ -2.9%.
In the primary sectors, the SMH led the
downside
at -3.4% to 31.77, but all of the sectors were strong to the red side. The
XBD
was -0.8%.
For Active
Traders
The QQQ, SPY and DIA all reversed at their
20-day
EMAs, and individual volatility band levels. The QQQ re-crossed its 200-day
EMA
of 35.23 to an intraday low of 34.40 and closing there. It has been above
and
below the 200-day EMA on five of the last six days and both ways on each
day.
The SPY hit an intraday low of 109.45, closing at 109.58 vs. the 200-day EMA
of
109.88. The 20-day EMA is now 111.80. The DIA after reversing from the
102.55
intraday high closed down at 100.40 vs. the 200-day EMA of 101.09. This
market
action is good for daytraders, but very difficult for position traders as
the
market gets kicked around by any bit of news.
Net net, it was a wide-range-bar day for the
SPX
with significant volume at 1.68 billion shares closing in the bottom of the
range and below the 200-day EMA for the very first time since the 1163.23
bull
market high on 03/05/04. The previous closing low was 1084.10 and actual low
was
1076.32. That’s the magnet to be taken out for an RST to set up. The .236
retracement to 769 from 1163 is 1070, and the .382 level is 1012, so they
are
the primary price action zones if the lows are taken out.
If the Generals should show up on the buy
side,
the 1094.64 200-day EMA is the first focus, along with the 40-week EMA at
1097.Â
Today’s
Action
I will be traveling Thursday through Monday,
so I
am doing this after the close on Wednesday and won’t see if the early
futures
continue red. If they do, price will continue to new lows, and that means
additional trading opportunities intraday with RSTs and Trap Doors.
The long synthetic straddles obviously
continue
to prosper as do the index puts vs. the longer-term index proxy positions.
The
increase in implied volatility, especially for the SMHs and QQQs, has been a
bonus to the positions.
Have a good trading day, and I’ll see you
Tuesday.
Kevin Haggerty
