Use These Reversal Strategies
Kevin Haggerty is a full-time professional trader who was
head of trading for Fidelity Capital Markets for seven years. Would you like
Kevin to alert you of opportunities in stocks, the SPYs, QQQQs (and
more) for the next day’s trading?
Click here for a free one-week trial to Kevin Haggerty’s Professional
Trading Service or call 888-484-8220 ext. 1.
The market action was
ugly last week as the SPX closed at 1264.68 on 01/25/06, rallied to
1287.94 on 01/30/06, and closed Friday at 1264.03. That took the air out of the
"last 2 days, first-three-days-of-the-new-month seasonality." The SPX was -0.5%
on Friday, -1.4% on the week and is -2.4% off the 01/11/06 1294.90 high. The
QQQQ closed Friday -5.5% off the 01/11/06, 43.31 high at 40.92 and -2.7% on the
week.. The semis, cyclicals and banks led the downside last week, with the SMH
-2.4%, CYC -2.4% and BKX, -2.3%. The TLT was +0.7% on Friday and the same for
the week. Commodities and related stocks continue to lead and are also the best
area of concentration for daytraders.
On Friday, the SPY/futures Trap Door off the 10:00 AM signal bar and 126.14 low
ran to 127.15 before reversing to close at 126.27. Initial exit was after the
126.89 swing point high at resistance. NYSE volume averaged 1.83 billion shares
last week, which is on the heavy side, with 1.7 billion shares on Friday. The
volume ratio was 35 and breadth -685. The 4 MA volume ratio was 40, down from 62
the previous Friday when the SPX closed at 1283.72. The 4 MA of breadth is -351
and the 5 RSI for the SPX is 30.31, so there is more downside room before a
short-term oversold condition.
The inefficiencies created by the earnings season
hype and the off-the-wall interpretation of each economic number is very trader
friendly to the different reversal strategies, such as Trap Doors, RSTs and
1,2,3s, especially when used in conjunction with the volatility bands, which are
incorporated in the
new trading service. These strategies are also available in the
trading modules and
Trading With the Generals seminar material.
Have a good trading day,
Kevin Haggerty
