Daytraders In Reaction Mode With First-Hour Strategies

April 2, 2004
Kevin Haggerty

What Thursday’s Action Tells
You

The recent supply/demand equation has been
tilted
by the Generals to the demand side because of the end-of-quarter mark-up and
some money put to work the first day of April. This has made the short-term
condition overbought. The 4 MA of the volume ratio is now 71 and it’s been
65
and above for the past four days. The 4 MA of the breadth is +1114, and the
five-day RSI has been above 65 for the past five days. Net net, the Generals
are
in motion.

The
(
OIH |
Quote |
Chart |
News |
PowerRating) was red at -2.7% on a
wide-range-bar reversal at the 20-day EMA after a five-day reflex up off the
89-day EMA. The OIH has made lower highs and lows since the 03/02 75.28 high
down to the 66.50 low on 03/24 at the 89-day EMA where the five-day rally to
70.70 started. This decline comes in the face of all the headlines about
“no top
in in gas prices,” etc. (And so the beat goes on.) The only two ETFs,
etc., with
above-average volume yesterday were the
(
SWH |
Quote |
Chart |
News |
PowerRating) — software HOLDRs —
+1.8%,
and the XLF +1.2%. In the major indices, it was the
(
IWM |
Quote |
Chart |
News |
PowerRating) — Russell
2000
iShare — at +1.1%.

Â	Friday 3/26	Monday 3/29	Tuesday 3/30	Wed. 3/31	Thurs. 4/1
Index	Â	Â	Â	Â	Â
SPX	Â	Â	Â	Â	Â
High	1115.27	1124.37	1127.60	1130.83	1135.67
Low	1106.13	1108.06	1119.66	1121.46	1126.20
Close	1108.20	1122.47	1127.00	1126.21	1132.17
%	-0.1	+1.3	+0.4	-.07	+0.5
Range	9.1	16.3	7.9	9.4	9.5
% Range	23	88	93	50	63
INDU	10213	10330	10382	10358	10373
%	-.06	+1.1	+0.5	-0.2	+0.2
Nasdaq	1960	1993	2001	1994	2015
%	-0.4	+1.7	+0.4	-0.3	+1.0
QQQ	35.22	35.85	35.92	35.84	36.16
%	-0.3	+1.8	+0.4	-0.2	+0.9
NYSE	Â	Â	Â	Â	Â
T. VOL	1.32	1.35	1.30	1.47	1.52
U. VOL	734	1.18	925	819	1.04
D. VOL	571	166	360	614	472
VR	56	88	72	57	69
4 MA	56	65	75	68	71
5 RSI	66	65	70	67	74
ADV	1789	2428	2186	2029	2174
DEC	1499	890	1089	1263	1121
A-D	+290	+1538	+1097	+766	+1053
4 MA	+313	+581	+1093	+923	+1114
SECTORS	Â	Â	Â	Â	Â
SMH	-0.9	+1.1	+0.1	-0.1	+1.6
BKX	-0.2	+1.5	+0.4	-0.3	+0.7
XBD	+1.4	+1.6	+0.2	+.05	+1.2
RTH	-0.3	+1.2	+0.2	+0.1	-0.9
CYC	+0.3	+1.8	+1.0	-0.1	+0.8
PPH	+0.1	+1.4	-0.2	+0.4	+0.9
OIH	+1.2	-0.3	+2.6	+0.5	-2.7
BBH	-1.5	+2.1	-0.3	-0.6	+1.9
TLT	-1.1	-0.7	-0.7	+0.5	-0.3
XAU	+1.0	+0.9	+1.1	+0.4	+0.4

Table Legend

Â ^next^

For Active
Traders

The initial trade opportunities came at the
familiar 10:00 a.m. ET time period where “things just seem to
happen.” It was a
45-minute rally, which took the major indices to their intraday highs where
the
best opportunities awaited the prepared trader. The SMHs traded to 40.49,
the
high end of the 40 – 40.50 zone (see March 31 commentary for all of these
levels
you were prepared for) and reacted down to 39.90, closing at 40.13. This
corner
is flat now into the resistance zone.

The QQQs traded to 36.25 in the middle of the
36
– 36.50 zone, then traded down to 35.92, but closed at 36.16. The
(
DIA |
Quote |
Chart |
News |
PowerRating)s
traded to 104.38, which is the .618 retracement zone, making a 104.36 high
on
the 10:45 a.m. bar before going trend down to 103.62 around 3:30 p.m. This
was
right at the 240 EMA and price then rallied up to a 104.08 close in the last
half-hour. You should have played, at a minimum, one of those three moves,
and
hopefully it was the sell entry, which had the most definition, and from
zones
you were ready for. I trust all of you new sequence traders saw the
additional
confluence at yesterday’s intraday highs, which was almost to the penny in
price
and at your anticipated zones/levels. (Check DIA first.)