Daytraders profit on the early weakness
Kevin Haggerty is
the former head of trading for Fidelity Capital Markets. His column is
intended for more advanced traders. Kevin has trained thousands of traders
over the past decade. If you would like to be trained by him,
ext. 1.
The first two days following
expiration were soft
but not unexpected (see
12/16 commentary), as the SPX declined from 1267.32 to a 1257.21 intraday
low yesterday with the close at 1259.92, almost unchanged from Monday.
Daytraders caught a range breakout to the downside on Monday (see SPY
chart) as the SPY declined from a 126.49 breakout to 125.69, closing at 125.71.
Monday’s SPX downtrend continued to a 1257.21 intraday on the 10:20 a.m. bar
yesterday, right at the five-day extended band. After entry above 1258.08, price
carried to 1263.86 but faded to close at 1259.62. The SPY gave you an RST long
entry on that same 10:20 a.m. bar above 125.60 which ran to 126.22 before
closing at 125.83. Energy led the green sectors yesterday with the OIH +2.0% and
XLE +1.4%. The XBD closed green at+0.8%, along with the SMH
(semiconductors) +0.4%. The soft price action following the expiration is a
positive and some more weakness today would be even more favorable if you decide
to play a short term index proxy position from the long side into any mark-up.
Partial long SPY positions have been initiated below 125.85. The only long-term
index proxy positions I want any part of is long synthetic straddles,
delta-neutral, and more will be put on into any year-end and early January
strength. For daytraders, the same extended five day weakness long play
yesterday was in the SMH as price hit its extended band with a 36.91Â
intraday low on the 9:40 a.m. bar. If you missed the 37.10 entry you got a
second shot above the doji bar high of 37.03 (see chart).
Just for fun, because of where this bull cycle is now in both
price and time, I went to the library last night and reviewed the articles
several months prior to and after the Dow (January 2000) and SPX (March 2000)
tops. I had more laughs than a good movie. The more things change the more they
stay the same. The early futures are green at 7:30 a.m. ET with the S&Ps +2.75
but should they reverse down early, look for any long side setups. Net net, the
SPX will be higher next week than yesterday’s 1259.62 close.
Have a good trading day,
Kevin Haggerty
