Powerful 1st Hour Reversal Strategy
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 short-term reversal (9/5 commentary) has made a 1466 low so far, and the
SPX closed yesterday at 1478.55. The reversal comes from the 1485-1516 key price
zone, and short-term overbought condition on Tuesday (9/4) with the 4-MA of the
volume ratio 73 and breadth +1385, in addition to a negative 5-RSI momentum
divergence. The Tuesday high was 1496.40, and closed at 1489.42, so the highest
probability was a short-term reversal. The SPX made intraday lows of 1466.34 and
1467.41 the past two days, and closed at 1478.55. There has been no real selling
pressure, as price declined with NYSE volume at 1.39 billion shares on
Wednesday, and just 1.28 billion shares yesterday. The tail (news) continues to
wag the dog (market), and the price moves are very erratic because of the lack
of electronic execution liquidity, as buy-side traders are all hitting the same
algorithm buttons at the same time, on each piece of news, most of which doesn’t
mean bumpkis, as it is not reported correctly anyway by the media, and the
integrity of the Bureau of Labor Statistics is long gone.
This is all positive for the daytrader, as the buy side traders all push
price higher/lower at the same time just following the news, so it gives us a
chance to play the high-probability reversal strategies that occur most
frequently in the first 90 minutes of trading. For example, there were RST buy
strategies yesterday in the 1st hour in the IWM and QQQQ, while the DIA made a
.786 retracement to the previous low and 816 ema. The entry was 132.95 following
the 10:20 AM 132.76 low, and it ran to 133.98. The opening bar high was 133.60,
and it traded straight down to 132.76, which set up the contra move that ran to
133.98. The IWM declined more than a point into the 10:20 AM 78.21 low, and the
contra move hit 79.37. The qualifying points for the RST are circled, but not
numbered, which you need to know to trade the strategy, in addition to some
simple but powerful rules, when to implement the strategy. That is all available
on several of the Trading Modules.
At 8:45 AM, it appears that the short-term reversal will continue this
morning, as the SPX futures are -13, so the 1st Hour reversal strategies are in
play, ie Trap Door, RST and 1-2-3’s.
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
