Reacting To The Overreaction
For those you unfamiliar with Kevin Haggerty’s volatility
bands, today’s open
provides us with a wonderful example of how useful a tool these are.
Volatility Bands
Here are today’s volatility
band levels for the Nasdaq 100 and S&P 500:
| Nasdaq 100 Index ( $NDX.X | Quote | Chart | News | PowerRating) |
Upper |
Lower |
|
1.0 |
1694 |
|
|
1.28 |
1704 |
1612 |
|
1.5 |
1712 |
1604 |
|
2.0 |
1730 |
1586 |
| S&P 500 Index ( $SPX.X | Quote | Chart | News | PowerRating) |
||
|
1.0 |
1155 |
1131 |
|
1.28 |
1158 |
1128 |
|
1.5 |
1161 |
1125 |
|
2.0 |
1167 |
1119 |
Here is the table from the 9:30 a.m.
ET post this morning with the highlight on the
1.0 volatility band at 1622 on the Nasdaq 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating).
Interestingly the reversal, comes in almost exactly at this level.
This allows traders to take advantage of this move with either
the Nasdaq 100 futures
(
NDH2 |
Quote |
Chart |
News |
PowerRating), the E-minis
(
NQH2 |
Quote |
Chart |
News |
PowerRating) or the
tracking stock
(
QQQ |
Quote |
Chart |
News |
PowerRating). Learn to utilize the volatility bands in your
trading and you can start to take advantage of emotional overreactions like
those that occurred on this morning’s open.
Until tomorrow,
Duke