A Useful Approach
The S&Ps
pointed towards critical resistance, 1125, hit it, then promptly fell
off hard into the afternoon before staging a minor recovery yesterday which
ended the day just above another key technical level, 1115. All in all, another
quiet options expiration day from an HVT
(High Velocity Trading) standpoint, although the afternoon session, in the midst
of the sell-off, offered a few good setups.Â
Will the lethargic price action
continue through today? Probably, especially ahead of a three-day weekend. No
need to worry though, I fully expect volatility to come back next week as the
market puts options expiration behind it. If the market continues to retrace
some of these recent gains off the 1085 level, I expect even more volatility. If
you have not noticed, these moves up have been very labored while yesterday’s
brief sell-off was far more decisive. I am firmly convinced that the market will
seek out lower ground in the sessions to come.
I am still finding good setups on
longer time frames, such as 5-, 15-minute and hourly charts. As usual these
positions will carry me and others through this relatively subdued period. As I
mentioned in
yesterday’s piece, HVT is a tremendously
useful approach to the markets for the following reasons:
1. It offers a higher-probability
approach vs. longer-term trading
2. No overnight risk
3. The ability to use HVT as a
building block as a means to trade on longer time frames. The technical patterns
are applicable regardless of time frame.Â
As a result, it allows you to
simultaneously be engaged in the market on different time frames. Or, as is the
case now, you can simply step back and focus more on longer term set-ups when
intra-day volatility contracts.
My upcoming on-line class, which
explores some of the building blocks of HVT and their application, will prove
invaluable. I will keep you posted for the official launch date, but it should
be later this month.
 The hourly chart of
D R Horton
(
DRI |
Quote |
Chart |
News |
PowerRating)) offered a nice
half-point move off the opening yesterday. You will recall that in yesterday’s
piece I had highlighted it on a daily basis. A look at the chart on an hourly
basis offered a great set-up on the long side at the opening.
Hasbro
(
HAS |
Quote |
Chart |
News |
PowerRating) another stock I highlighted yesterday, offered a setup to the short
side for about a half-point at the opening as well. However, if you were too
greedy and overstayed your welcome, you would have not only given back all the
gains, but then be in the hole. You can never overstay your welcome when the
price pierces through a Bollinger Band like
it did on the hourly chart below.
I was not able
to prepare the KTNs
for today, I do apologize. However, 1115 and
1125 will remain pivotal as
will 1085.
Enjoy the long weekend
and as always, feel free to send me your comments and questions. See you in
TradersWire.