Best trading day of 2006
Kevin Haggerty is a full-time professional trader who was
head of trading for Fidelity Capital Markets for seven years. Would you like
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The SPX closed at
1309.72, +0.3% as did the Dow, to 11,383. However, the SPX close is
not indicative of the 19.4 point daily range, which was a daytrader’s bonus. It
set off key reversals for the major indices, OIH, XLE, SMH and obviously many of
the component stocks. Taking out the 1299.17 SPX Tuesday low set upthe RST. It
hit an intraday low of 1295.57, which was right at primary support. The China
hype on a rate increase and programs created a significant artificial discount
opening–to the delight of market makers and specialists. The casino was open
and it made plenty on the contra moves following the extreme opening discounts.
The SPX RST entry was above 1296.58, which worked
its way up to 1315 before closing at 1309.72. Some of you familiar with my
reversal strategies might have also taken the RST sells after the 1313.05 and
1315 highs. The OIH entry above 152.87 ran to 159.08 before reversing, while the
SMH RST entry ran from 36.93 to 38.20. All of the RST reversal strategies were
from the -2.0 or -1.5 volatility band zones. The commodity stocks were down
significantly (China hype) in the opening period, but the contra moves up were
sharp. However, they failed after these advances to close on the downside, with
the XAU -3.6%, OIH -2.1%, FCX -3.5%, PD -4.3%, NUE -4.3% and AA, -4.5%, just to
name a few of the commodity-related stocks.
The month-end activity is evidenced by NYSE volume of 2.1 billion shares and the
neutral internals, which are a volume ratio of 50 and breadth -264. The 4-day
MAs are also neutral at 45 and -264. This is a negative, with the SPX near
closing highs (1311.56 on 4/5/06). Today is month-end and after yesterday’s
bonus trading day at the casino, it might be better to do something else unless
there is another extended volatility move accelerated by the futures.
Have a good trading day,
Kevin Haggerty
