Did You Take This Anticipated Trade?

August 31, 2004
Kevin Haggerty

What Monday’s Action Tells
You

The market action, or lack of, remains
subservient to the other factors mentioned in yesterday’s commentary. NYSE
volume hit another low at 848 million vs. 876 million on Friday, but there
was
more price action which gave daytraders some opportunities.

The initial SPX resistance you should be
aware of
is the previous swing point high of 1108.60, the three-month EMA 1107.42,
89-day
EMA 1104.96 and the .50 retracement to 1146.34 (the 06/24 high) from 1060.72
which is 1103.53. 1114 is the .618 retracement zone to the 1146.34 high.
With
the SPX closing at 1099.15 yesterday, the longer-term EMAs in play are the
200-day EMA at 1093, with both the 233-day and 12-month EMAs at 1088 (all
EMAs
rounded off). 1089 is also a natural square number, and those of you with
the

seminar material are aware of how to incorporate that into your overall
sequence outline.

I have included the QQQ daily chart where you
can
see the initial price recoil from resistance. Price hit a 34.68 high for the
current rally before yesterday’s reflex down to a 33.94 intraday low,
closing at
33.98. The 233-day EMA is 34.70 with the 200-day EMA at 34.90, and the .50
retracement to 37.90 is 35.12, in addition to the previous swing point high
at
35.10. This is why I use the term “entry at the lowest common
denominator”
because the stops are so tight just above resistance.

For Active
Traders

In spite of the low NYSE volume of 848
million,
there were some trade setups. On the SPX five-minute chart, you see the Flip
Top
entry below 1105.64, which was also below the 240 EMA. After hitting the
1102.56
low, price couldn’t get past the 1105.64 entry level, and then went into a
Slim
Jim between 1103.86 – 1102.90 from about 12:00 p.m. ET to the breakout on
the
2:40 p.m. bar which took the SPX down to the 1095.15 low and close.Â
Although they were not big trades, there were defined with both entries from
familiar patterns for many of you and below all of the EMAs, so you had to
play
in the game. The SMH had the same patterns, and I have also included that
five-minute chart.

On Friday, you got a heads up in brokers like
(
MWD |
Quote |
Chart |
News |
PowerRating) and
(
GS |
Quote |
Chart |
News |
PowerRating). I said MWD had rallied 13 days to its 52.08 – 52.17
200-
and 233-day EMAs and to be looking for intraday shorts. Monday was a
narrow-range day, 51.97 – 51.45, following Thursday’s 52.10 high right at
resistance. Yesterday was opportunity as MWD gave you good trade-through
entry
below Monday’s 51.45 low and trading down to a 50.53 intraday low, closing
at
50.60. The intraday entry is show on the five-minute chart that was also a
Slim
Jim entry and below the previous day’s closing range. If you have my trading
materials, you are aware that the best daytrades occur most often from the
best
clearly defined chart setups, and that is how I start the daily trading
plan, by
checking the screens on my commentary page.