Are You Trading Trap Doors Yet? Here’s Why You Should
What Tuesday’s Action Tells
You
For the daytrader, it was an uptrend day,
starting after the gap-down openings and intraday lows for the major indices
in
that 10:00 a.m. – 10:15 a.m. ET time period.
The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) declined -0.2% to
1121.84, but had rallied from the 1115.77 intraday low on the 10:00 a.m.
bar.
The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was almost flat at 10,077, while the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating), 1925, was -0.2%, with the
(
QQQ |
Quote |
Chart |
News |
PowerRating) off a couple of pennies
to
35.72.
NYSE volume expanded from the holiday trading
to
1.32 billion with the volume ratio 32 and breadth -192. In the sectors, the
(
SMH |
Quote |
Chart |
News |
PowerRating) was -1.6% and the
(
OIH |
Quote |
Chart |
News |
PowerRating) -1.5%, while the XBD was green alone
at
+0.8%.
For Active
Traders
It was
Trap Doors for the major indices and
the SMH. The QQQ was the best early setup on the 35.20 intraday low, which
was -1.5%
from the previous 35.75 close. It was the most extended major index as
the -1.5
volatility band was 35.21. Major support with the 200- and 233-day EMAs was
just
below at 35 – 34.80. The QQQ traded to 35.45, retraced to 35.31, then hit
35.59
before going sideways into a
Slim Jim that broke out above 35.55 in the 2:25
p.m. program period, trading up to 35.80 and closing at 35.69.
The SPX traded to the 1115.77 intraday low
with
the -1.0 volatility band at 1116.51. Minor support from the previous
commentary
was 1115 – 1112, so price was close before reversing. If you played the
(
SPY |
Quote |
Chart |
News |
PowerRating), you got in around 112 – 112.10. It traded up to 112.43 vs. its
200-day SMA at 112.40, then fell off to 112.05 before trading up into a Slim
Jim
with a 112.33 high. The breakout at 2:25 p.m. re-crossed the 200-day SMA up
to
112.83, then faded to close at 112.55.
The SMH gave you another Trap Door trade
entry
above 30 after the 29.81 intraday low and four-bar narrow range after that
29.81
low. The -1.28 volatility band was 29.86 and -1.5 volatility band at 29.73.
Price traded up to a 30.31, closing at 30.20.
All told, it was a good day for daytraders in
the
major indices, and once again extended price moves continue to provide
excellent
trading opportunities. It must be frustrating the hell out of the momentum
money
managers.
Today’s
Action
(
INTC |
Quote |
Chart |
News |
PowerRating) reported last night and was +2.8%
at
4:50 p.m. on 9.4 million shares, but has slipped off some this morning.
However,
some green carried over this morning with the S&Ps +3.30, Dow +30 and
Nasdaq +12
at 7:20 a.m.
Yesterday’s Trap Door reactions were from
anticipated minor support levels, so you were aware of the zone, and if you
followed the defined pattern’s “rules,” you had a good
day.
The 1129 – 1132 zone is the immediate SPX
intraday overhead resistance with the 200-day SMAÂ below the 1121.84
close
at 1119.92 and then the minor support below that from 1115.24 –
1112.93.
The QQQ closed at 35.69 with the 200-day SMA
at
35.83. The last two intraday highs are 35.86 and 35.84 yesterday. The
immediate
minor support is 35.10 – 35.15, then the more important zone at 35 –
34.80.
Have a good trading day,
Kevin Haggerty
Spend the next year trading with me.Â
Click here for details.
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