1st Hour Strategies And Core Framework Result In Pre-9:30 AM Profits
What Friday’s Action Tells
You
The jobs dance was an excellent opportunity
for
daytraders, not to mention the bonanza for those of you who are involved in
the
synthetic straddles with this corner. In spite of the fact that unemployment
is
5.5% now, which is at historical lows, and the number of Americans working
is at
an all-time high, the +32,000 non-farm payroll jobs sent the futures down
like a
knife right after the 8:30 a.m. ET report. Of course, this report is an
add-on
to the negative terror upgrade and oil prices, both a major media focus, so
the
fear day was compounded.
The last surprise non-farm payroll day was
the
February number of +21,000 jobs, well below expectations. That came right at
the
116.95
(
SPY |
Quote |
Chart |
News |
PowerRating) high, and 1163 SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) high on Friday, March 5,
the
day of the report. The surprise number came as the SPX closed right at the
.50
retracement to 1553 and previously had no real retracement since the
03/12/03
789 retracement to the 769 October 2002 low. This catalyst with the key
retracement zone resulted in a decline of -6.9% high-to-low to 108.85 before
the
+6.0% reflex to 115.41.
As long as the political agenda and media
focus
on the manufacturing loss of jobs (they have been increasing), non-farm
payrolls, while failing to mention that manufacturing is less than 12% of
our
GDP and that since the dot-com bubble burst many Americans have started
their
own businesses. That part of the household jobs survey is booming, but of
course, the politicians and media never mention that. Traders will continue
to
benefit from this report as long as the emphasis remains on the non-farm
payrolls and manufacturing.
The decline for the SPY is -4.2% in four days
from the SPY 111.35 high.
Both the SPX and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) were -1.6%
on
Friday and are -3.2% in two days. NYSE volume was 1.52 billion with the
volume
ratio 16 and the 4 MA now 26, with the 5 RSI at 14. Breadth was just -780,
skewed by the sharp jump in the TLT (bond proxy) of +1.7% which bolstered
many
inconsequential financial funds, etc., on the NYSE. For the week, the SPX
and
Dow were -3.5% and -3.2%, while the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was -6.0% and
(
QQQ |
Quote |
Chart |
News |
PowerRating)s -6.4%.
In the sectors, the
(
SMH |
Quote |
Chart |
News |
PowerRating) was -7.0% on
the
week, with the
(
OIH |
Quote |
Chart |
News |
PowerRating) -6.2%, CYC -4.9%, RTH -4.5% and the XBD -4.0%. The
BBH,
which is a minor sector, lost 7.6%.
For Active
Traders
The knife after the 8:30 a.m. jobs report
took
the ESU4 futures down to 1066.25 on the 8:50 a.m. bar from the 1082.25 high
on
the 8:25 a.m. bar. The SPX -2.0 volatility band on Friday was 1065.51, so you
either decided to play in the pre-9:30 a.m. game or not. The contra move ran
+8
points to 1074 on the 9:45 a.m. bar, and the rest of the day was a Slim Jim
which broke out to the downside just before 2:00 p.m. with about a -8 point
move
down, closing at 1063.75. The Dow and the QQQ had the same Slim Jim
patterns.
If you are an SPY player instead of the ESU4,
they traded pre-9:30 a.m. to 107.18 and opened at 107.63, hitting 107.85 on
that
first bar and a 107.96 intraday high on the 9:45 a.m. bar.
Today’s
Action
We start today with the SPX having closed at
1063.97, which is right at the four-week trading range minor support of
1063.75,
as you see on today’s weekly chart. This is just the first time that the SPX
has
made a .236 retracement (1070.10) to its 769 October 2002 low. This level,
along
with the short-term oversold condition, can produce a trading reflex, but
the
stronger zone is 1010 – 1020. This zone is the .382 retracement to 769 of
1012.49 and the .382 retracement to 789 at 1020.24, in addition to a 13-week
trading range support at the 1015 level (all on the weekly
chart).
The QQQ closed at 32.72 with a 32 intraday
low.
This is vs. the 31.65.382 retracement to the 19.76 October 2002 low. The .50
retracement is 29.38. The Nasdaq, which had gained +94% from 1108.49 to
2153.83,
closed at 1776.89 vs. the 1755 .382 retracement to that 1108.49 low. The SPX
gained 51.3% low-to-high on this bull move and has declined -8.9% so far, or
just 17% of the total 51.3%.
The weekly 5 RSI for the SPX is 22.61 vs.
19.43
for the week ending 07/23 that had a higher low, but has not hooked up yet
with
a higher bottom to signal that intermediate positive divergence.
Daytraders can continue to buy these air
pockets
down, and sell retracements, while position traders will have the best
potential
long SPX setups around the 1010 – 1020 zone.
Have a good trading day,
Kevin Haggerty
