Volatility and 1st-hour strategies this week
Kevin Haggerty is a
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The SPX traded in a narrow range (2.4 points) Friday between
1362.86-1360.50 until 12.15 PM when a push was made to new highs. If you
are going to influence price, the noon hour is a good time to do it. A new
intraday high was made at 1366.63, but there was no acceleration and the SPX
moved back 4 points, but then closed at a new 1365.60 (+0.2%) cycle high.
There was no selling pressure on Friday, and the internals were positive, even
when $INDU was -35 points in early trading. NYSE volume dropped to 1.51
billion shares, with the volume ratio positive at 60 and breadth on the light
side at +619. Commodity sector stocks were strong again on Friday, and it
was across the board in steel, copper, gold and energy. The OIH was +4% in
the past 2 days, and $HUI was +5.5%.
The initial sector trading action Friday was energy, despite
the gap-up openings. There were many first-hour strategies in play, like
Flip-Tops, 1st Consolidation Breakouts, and Slim-Jims. Despite the narrow
SPX range all morning, there were opportunities for traders, as they all broke
out on the first hour. There were also similar setups in industrial
stocks, like Weyerhaeuser
(
WY |
Quote |
Chart |
News |
PowerRating) in the
same time-frame. The semis were up again, as the SMH has advanced 3
straight days on a breakout of the contracted volatility pattern and long-term
moving average resistance. The same is true for
Intel
(
INTC |
Quote |
Chart |
News |
PowerRating). Both were anticipated prior to break-out and
played in the "Trading Service." The reason is if "they" are going to
continue pushing the mid-term election rally, "they" have to continue rotating
to different sectors, not just buying McDonald’s
(
MCD |
Quote |
Chart |
News |
PowerRating) , American Express
(
AXP |
Quote |
Chart |
News |
PowerRating) and
General Motors
(
GM |
Quote |
Chart |
News |
PowerRating).
This could be an active week for traders, because starting
Tuesday there is a full week of economic reports, in addition to some big-cap
earnings reports. I expect that the administration will try to put the
economic numbers in a positive light, because it is the last time for these
reports until after the election. If that is the case, the media will be
in hype mode, and that will make it easier for "them" to extend the current
rally toward the mid-term election.
Have a good trading day,
Kevin
Check out Kevin’s strategies and more in the
1st Hour Reversals Module,
Sequence Trading Module,
Trading With The Generals 2004 and the
1-2-3 Trading Module.