Look For Bounce
The S&P futures wagged the dog again yesterday, causing the big rush down on the NYSE opening. The trap door was opened and the Dow dropped 75 points in the first five minutes, but by 10:30 AM ET the Dow was down only 3 points and the S&Ps were even. So goes the battle.
The specialists traded nicely out of early positions and there were nice Trap Door and Opening Reversal trades to capitalize on. The S&P futures often create the activity that will stop out day traders who are trying to keep losses small (1/4 – 1/2 point), which they should be doing; but if they take a quarter point from you, they often give you a point–see a five-minute chart of IBM.
Bottom line, yesterday’s volume was even lighter than Friday’s. The S&P and NDX both closed below their 50-day exponential moving averages (EMA). If you trade SPDRs or QQQs, look for short plays below yesterday’s lows and buy reversal trades if they trade lower than reverse above their 50-day EMAs.
The S&P closed at 1347.75, just above its low of 1346.09. There’s a Fibonacci conversion that bears watching at the 1332 level. This is a 62% retracement of the 1277 to 1420 move, and also a 78% retracement of the last swing point move from 1308 to 1420. But with the S&P futures up over 8 points around 8:30 AM ET, it looks more like the market will trade back above the 50-day EMA rather than make a move down to those lows. The institutions didn’t show up yesterday, but I’m sure the “add to position” buy lists are on their desks.
Target Stocks Of The Day Â
| Program Trading Numbers | ||
| Buy | Sell | Fair Value |
| 10.05 | 6.35 | 8.20 |
Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his new series of tutorial articles.