Market Strategy and Traders Edge
The SPX finished at +0.8%, reversing the -0.8% loss the previous day, with
NYSE volume expanded to 1.73 billion shares. It was not a very strong reversal,
seeing that the index was -5.1% the previous 3 straight down days. The good news
is that the 1318 .618 retracement level to 1270 from 1396 held up, as the SPX
closed at 1336.91. The volume ratio (adv. volume/ adv. volume + decl. volume)
was 62 and breadth +826. Members of my Trading Service were prepared for both
reversals yesterday. The SPX hit a 1316.75 low on the 9:50 AM bar, and this set
up the high probability RST reversal strategy, because it took out the 1/28/07
1322.26 low. The symmetry was the 1318 .618 retracement to the 1270.05 low, from
the 2/1/08 1396 high. The RST entry was on the 10:00 AM bar, and it ran to
1337.49 after reversing the 1318 level. The second long opportunity was the
1-2-3 higher bottom strategy, after the SPX reversed from 1337.49 to 1322.37.
The 1-2-3 HB trade ran to 1347.16, versus the 1347 key angle (180 degrees) from
1576. The reversal of 1347 and the 1344.07 low of that high bar declined to
1323.44 before closing at 1336.91. Traders familiar with the strategies had an
excellent day, regardless of whether they caught 1, 2 or all 3 of the strategy
setups.
The best opportunities for daytraders and swingtraders have been trading the
extended reactions both ways, which are accelerated by the futures and Globex
pre-9:30 AM NYSE opening and during the session on overreactions to every piece
of perceived negative/positive economic, credit and housing news. The
institutions and hedge funds have fast trigger fingers on any piece of perceived
negative individual stock news, and the reactions are accelerated by the
electronic execution system, and the “no uptick” short rule, which is simply
totally inadequate in high volatility bear market.
This bear market is 4 months old, and any rally to the 1423-1460 zone will be
a primary selling opportunity for traders and investors alike, especially if it
is into the time symmetry for mid- to late-February.
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, and Go Giants.
Kevin Haggerty