A Daytrader’s Best Tool
Extended price reactions continue to
be a daytrader’s best tool. On Tuesday it was
IBM and IP from the short side after the gap-up openings and yesterday it was
even better with the semiconductors after the INTC noise, which historically has
always exaggerated price action after these announcements. INTC closed at
28.71 on Tuesday and opened at 27.10 yesterday, -5.6%, then traded to 26.85 on
the 9:50 AM bar. After the
Trap Door entry above 27, INTC traded up +1.6% to a 27.44 close. When a
stock is extended due to company specific news rather than general market
conditions, it is better to trade the related stocks that are extended due
to–in this case–INTC news. The most diversified would be to trade the SMH,
which yesterday opened at 36.68, -2.2%, and hit 36.55 on the first bar. The Trap
Door entry was above the 9:55 AM bar’s 36.69 high and that was a moonshot from
there, trading +2.9% to the 37.75 intraday high and closing at 37.71. (see
chart) The -2.0 volatility band was 36.64 and -3.0 band was 36.21, so all you
Sequence Traders know how good that zone is. I was glad to see that many of
you who emailed me yesterday caught that trade while others selected KLAC out of
the Flip Top pattern above 48.28Â that ran +5.6% to a 51 high, closing at
50.98. It doesn’t get any better than that. KLAC had clearly showed better
relative performance on the opening as it closed Tuesday at 48.65 and opened at
47.96, with the intraday low of 47.75 on the 9:50 AM bar.
Today’s earnings game could be EBAY, which was +14.2% in after
hours trading yesterday. It is just one big casino where “bad is good and good
is bad.”
The semiconductor reversal was the impetus for the major
indices to close green, with the SPX +0.5% to 1235.19, Dow, +0.4% to
10689, QQQQ, +0.7% to 39.46, as was the Nasdaq to 2189. NYSE volume was 1.57
billion shares, with the volume ratio 65 and breadth +1257. In the sectors it
was a big industry day as the $TRAN, +3.6%, and XLB, +1.6%, were the leaders,
yet the TLT was +0.5%.
At 8:15 ET, I see that EBAY hit 40.50, +16.2%, so the game is
on.
Have a good trading day.
Kevin Haggerty
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