First Hour Strategies Prevailed Yesterday
What Monday’s Action Tells
You
The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) traded in less than a
5
point range until 3:00 p.m. ET and then declined about 5 points into the
1163.75
close, -0.3% on the day. NYSE volume fell off to 1.49 billion shares with
the
volume ratio 34 and breadth -714. This made the short-term condition
oversold
based on the 4 MA of the volume ratio now 30 and 4 MA of breadth -696.
The technology sectors had the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) at
-1.4% to 36.53 and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) at 2009, 1.3%. Leading the
primary
sectors downside was the
(
SMH |
Quote |
Chart |
News |
PowerRating), -1.7%, and the RTH, -1.0%, while the
brokers, XBD, and bankers, BKX, finished small green, along with the
(
OIH |
Quote |
Chart |
News |
PowerRating),
+0.8%.
The only travel range in the major indices
occurred in the last hour, assuming you traded the break to new intraday
lows
(not in this corner). When the indices go sideways, scrolling for individual
stock setups is usually productive for daytraders. One example is
(
GE |
Quote |
Chart |
News |
PowerRating),
which
has been trading in a nine-day range between 35.98 – 35.07 prior to
yesterday.
The 50-day EMA is 35.74 and the 89-day EMA is 35.20. GE is also oversold and
in
an uptrend, the same as the SPX.
If you were scrolling your
“Above the
Line”
stocks yesterday, you should have been alerted to the GE
Trap Door on
the
10:00 a.m. bar which made a contra move to the 35.70 and the 816 EMA after a
35.03 entry level. Not bad for a stock that doesn’t have a large daily
range.
(See both GE charts.) GE declined from the 816 EMA to 35.24, which is the
.618
retracement to the 34.96 low, so the stock becomes a focus again this
morning,
depending on how the early green futures hold up.
If you are prepared and understand the basic
strategies for
First-Hour trading, there were many other opportunities like
GE
yesterday on a day that was not major index friendly.
I actually turned the sound up on CNBC this
morning in a weak moment, and the media hype about “better than”
and “worse
than” a penny according to the analysts’ estimates was in full bloom.
All of a
sudden, as per the media, what the analyst says has meaning, but of
course,Â
you remember these same analysts following stocks down from the 2000 top and
wrong all the way, and even the media turned on them. However, now that
stocks
have been in a bull cycle, the analysts are reborn and the absolute word
once
again. Also, you do remember how many of the major brokerage firms’
portfolio
strategists were fired just about at the bottom of the last October 2002
lows.
You will see the same thing happen in this cycle, and the retail investor
will
get caught once again as the analysts disappear all the way down to the next
cycle bottom.
Have a good trading day,
Kevin Haggerty
Â
