Traders continue to profit on volatility
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?
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The SPX started the day with a 1st Hour Reversal Trap
Door, which was also an RST sell entry below 1386.36. It carried down to
the 816 ema (5-min chart) zone and 1379.06 low. This set up the RST buy
setup with entry above 1380.13 which ran initially to the .618 retracement to
the 1388 intraday high. It traded in this zone for an hour, and most RST
traders that played both RST’s had locked in about 9 points at that point and
were gone. For those of you who waited it out (not here), there was
another one of those mystery program spikes that lasted just 30 minutes from
2:35 PM to 3:00 PM, but it was a +9.5 point move to 1394.49, the intraday high.
If you hung around for that, pat yourself on the back; you got lucky.
After that, the SPX traded sideways into the 1393.15 close. It was a
perfect setup for the program gang to leg into the premeditated move, knowing a
breakout of the 22-day SPX range and 1389.45 bull-cycle high would bring in
buyers. It is also options expiration this week. It was made to
order for the “gang” by buying the calls’ advance, taking the futures up and
then completing the stock into the advance.
NYSE volume expanded in front of expiration to 1.71 billion
shares with the volume ratio 74 and breadth +1549, helped in part by the TLT
(+0.4%). The semis, on the upgrade the other day, were +3.1%, and now
+6.2% for the past 3 days. Three weeks ago it was the downgrade, and they
went south from 35.95 to 32.75, so the game goes on. It was an earnings
reporting day for many retail stocks, so the “herd” was all over that group.
There were new bull-cycle highs yesterday for the SPX, $INDU, $NYA and IWM, not
confirmed by momentum, which is usually the case after program spikes, following
range consolidations. Both of the SPX RST entries yesterday were reversal
trades, and that has also been the case for most of the commodity sector
daytrades recently. That will not change because of a program spike move
to highs, and if there is early continuation this morning, and the major indexes
form Trap Door short setups, they will be taken with the previous range high’s
now minor support.
Have a good trading day,
Kevin Haggerty
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.