The Best Daytrading Strategy For This Market
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 SPX made a new low of 1490.40 (-5.4%) on Monday, from the 1576.09 cycle
high on 10/11/07. By Friday, the index had regained 52% of that decline to close
at 1535.28 (+1.4%) on Friday, and +2.4% on the week. Bad news continues to be
good news, and coincidences continue to happen, as each decline the last 3 days
had similar afternoon upside reversals. All of this with a $US Dollar that has
declined to a record low against the euro, and the $US Dollar Index ($USD)
closing at $77.00, in addition to gold rising on the way to 800 and higher,
especially if the Fed cuts rates, which well send the $US Dollar even lower. On
top of that, we saw crude oil above $92, and other commodities also trading
higher. The media spinners point to the Microsoft and Apple earnings, while they
ignore the many other big-cap earnings implosions with negative guidance for
2008. MER announced the monster of all write-downs, and CEO Steve O’Neal will be
probably pushed out the door, but my guess is that they have another big
write-down in the 4th quarter, and there is a lot more of this on the "street"
that hasn’t been announced yet. Even if the Fed cuts rates again, that still
won’t create a market for all the bad mortgage securities paper and SIV’s. FYI,
more write-downs will be forthcoming. When the empty suits of the media are
finally talking economic slowdown, that means we are already in a recession of
sorts. However, the most important factor for the equity and bond markets right
now is whether or not the $US Dollar comes under more significant selling
pressure, and foreigners increase their selling of US securities, both stocks
and bonds.
Based on how the major indexes are trading relative to the negative economic
and financial conditions, the market is either discounting way too much and/or
the PPT is doing one hell of a job keeping this market from selling off. I think
it is all of the above. The energy and commodity sectors will continue to do
well on another rate cut, as will gold, because the $US Dollar will decline.
Long term is after lunch for the hedge funds in this fragile market, so
short-term un-hedged position traders are at a significant disadvantage to
daytraders. With the PPT so active trying to control (manipulate) the equity
market, trading the extended volatility strategies has been very active and
highly successful. This is especially true when you focus your trading on those
stocks/groups/sectors that are outperforming the major indexes, and are the
major holdings for the Generals and large hedge funds. The market is a "Casino"
now more than ever, and institutions are very aggressive in trading/pushing
their major holdings higher. As daytraders, you must have a stock selection
process that identifies these stocks, and know the different strategies that
will keep you on the train and give you the edge. I suggest you scroll through
the different trading modules listed below, and take a 1-week free trial
subscription to see what I mean, because you can browse through the archives,
and also, there is a description of the stock selection process.
Wednesday is month-end, and then the first couple of days of the new month,
so under normal circumstances, the bias would be up. Based on the magic
afternoon rallies Wednesday-Friday, I would anticipate this bias to play out.
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.
Have a good trading day,
Kevin Haggerty
