1st Hour Strategy Wins Again
What Monday’s Action Tells
You
At the end of the day, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
was
still off 106 points, or -1.1%, to close at 9907. The pre-market futures
yesterday were big red, and to the delight of professional traders, Market
Makers and Specialists, it stayed that way through the opening, forcing a
discount opening with price trading down into the 10:00 a.m. ET period. The
day
ended after the contra move up as the major indices went sideways into the
close
for the rest of the day. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1084.08, -1.1%,
after
hitting the intraday low of 1079.36.
For the third day, NYSE volume was toward the
lighter side at 1.43 billion, but the volume ratio was -15. Breadth
was -1243
and was actually helped by the fact that the
(
TLT |
Quote |
Chart |
News |
PowerRating)s advanced +0.9%. The
reflex attempt for the TLT, as expected, started after the 80.91 magnet low
of
08/14/03 was taken out last Thursday when the TLT closed at 80.65. It closed
at
82.03 yesterday The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating), the weakest of the major
indices,
closed at 1877, -1.5%, with the
(
QQQ |
Quote |
Chart |
News |
PowerRating) at 34.42, -1.0%.
In the primary sectors, the brokers (XBD)
were
-2.1%, CYC -1.8%, RTH -1.2% and the
(
SMH |
Quote |
Chart |
News |
PowerRating) -1.1%. In fact, the SMH
declined
for the fourth successive day and is -4.8% over this period as volume has
also
declined. That gets my attention.
My stock screens today on the commentary page
only had one really common thread and that was some small buying in the
drillers, like
(
NE |
Quote |
Chart |
News |
PowerRating), +3.2%, which had declined 21% since 03/05. There was
also some buying in
(
BJS |
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Chart |
News |
PowerRating),
(
RIG |
Quote |
Chart |
News |
PowerRating),
(
BHI |
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Chart |
News |
PowerRating),
(
AHC |
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News |
PowerRating) and
(
KMG |
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Chart |
News |
PowerRating).
They will get a look-see today in case the Generals show up.
For Active
Traders
It was a Trap Door morning yesterday for
those of
you who utilize my strategies. Early big red futures forced a discount
opening
in the major indices and the subsequent price decline into our favorite
10:00
a.m. reversal zone. The SPX was a no-brainer as it traded down to a 1079.36
intraday low on the 10:05 a.m. bar. The 1.5 volatility band was 1081.65 with
the
2.0 volatility band at 1076.97, in conjunction with the 1076.32 previous low
of
this down move last Wednesday. It was a narrow-range signal bar with a
1080.60
high and 1079.36 low. Entry was above that high, which also re-crossed the
1080
200-day EMA. The rally ran to 1089.34 by the 11:25 a.m. bar, then it went
sideways into the 1084.10 close.
You also had the
(
SPY |
Quote |
Chart |
News |
PowerRating) numbers, with
108.50
being the 200-day EMA and also the three-month 1.0 standard deviation band.
The
SPY hit a 108.41 intraday low on that 10:05 a.m. bar. You got entry above
108.61, or maybe you chose the E-mini above 1080.50. The SPY ran to 109.50
and
the E-mini to 1089.50. If any of you took the gap pullback short after that
contra move, the SPY did resume the direction of the opening and traded to
108.71 on the 1:40 p.m. bar. The point is the Trap Doors yesterday were a
no-brainer for all of you sequence traders and also those of you just
familiar
with the first-hour strategies. You made your plus day on the same side as
the
Market Makers and Specialists. The 90 – 60 rule keeps the plus side green
once
again.
The
(
DIA |
Quote |
Chart |
News |
PowerRating) gave you the same kind of
trade. If
you played the QQQ, it hit a 34.11 intraday low, holding that previous 34
level
and then made a contra move to 34.62 and the 60-period EMA (five-minute
chart)
which is equivalent to the 20-period EMA on the 15-minute chart.
Today’s
Action
Yesterday was really a sideways day after the
discount opening, so the major indices ranged out. By that I mean, for
example,
the QQQs had a range on a closing basis between 34.42 – 34.17, except the
34.62
intraday contra move high and 34.11 Trap Door low. Looking at a higher
timeframe, you have a 14-bar Slim Jim on the 30-minute chart between 34.54 –
34.28 on a closing basis. In sequence, we trade protracted volatility
patterns
as well, and so the current narrow range for the QQQ, SPY and DIA are in
primary
focus. You have the lower levels from yesterday, and now you have a tight
range
focus, so we just wait for our ticket to ride the train when it leaves the
station.
“Have a good day, Easy
Rider.”
Kevin Haggerty