Bad News is Good News for Day Traders
From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.
The ST-O/S bounce from the 2/18-2/21 time symmetry was a quick 2 day +5.0% move to 780.12 on Wed, from 742.37, but Obama’s speech to Congress and his budget proposal quickly ended the move as the SPX has declined -2.7% the past two days, and went out yesterday at 752.83. The INDU finished at 7182, with resistance at the 7449 11/21/08 low.
NYSE volume was 1.5 bill shs yesterday, with the volume ratio and breadth neutral at 43, and -245. After the up opening, when the SPX ran to 779.42 on the 10:45 AM bar (5 min). Obama starting talking Budget and the market immediately went south as the SPX traded down to 751.75, and closed at 752.83. Once again, day traders can thank “Big Brother” for another profitable downside reaction. The top of the 5 day range was shorted by traders, because it is was a low common denominator entry, and could easily be doubled up and reversed (cover and go long) if it reversed out of the range.
Traders also capitalized yesterday on some 1st Consolidation B/O’s to new intraday highs in the 10:00AM time slot, so it was a good day in both directions for traders. The OIH and FCX 5 min charts are included, as they are a primary focus in my Trading Service. I always put a significant emphasis on trading contracted and extended volatility, and since the Geithner “no specifics” speech on 2/10/09 that resulted in a mini-4.9% meltdown in the SPX, there have also been many extended volatility strategy trade opportunities using my RST and 123 reversal strategies.
I said in the last commentary (2/24) that “I would imagine there will be some mini runs on deposits from C and BAC when they are formally nationalized in the next week or so, and that will generate more volatility for traders” Well, Geithner said on Tues that the big banks would not be nationalized, so I guess he was using Clinton’s “It all depends on what you mean by nationalization because C (news) as of this morning is even more a ward of the Government the it already was. The market obviously doesn’t like it because the SPX futures are -18 points as I complete this commentary at 8:45 AM.
There is nothing positive to say about the market right now based on what the new administration has put forth the last two weeks, and the SPX will take out the 11/21/08 741 low this morning, which makes taking out 700 at some point an easy target and I think it will.
Click here to find full details on Kevin’s courses including Trading with the Generals with over 20 hours of professional market strategies. And for a free trial to Kevin’s daily trading service, click here.