Defined entries only on expiration Friday
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 market gapped up on
the opening Thursday and the SPX
(
SPX |
Quote |
Chart |
News |
PowerRating) traded in just a
four-point range between 1237.27 – 1233.43 all day until the buy programs
started on the 2:10 PM bar. This produced a +5.6 point move and a 1242.80 close,
+0.9% on the day. The range expanded to 11.7 points vs. Wednesday’s 5.1 points.
NYSE volume picked up some to 1.69 billion shares and the internals were
one-sided with a volume ratio of 80 and breadth +1597. Thursday was the first
positive breadth day of four and it looked like the program move would also take
out the SPX 1246 rally high magnet. That will happen probably today as the
futures are green early, and really has to before any retracement. TLT advanced
for the third straight day and is +1.9% over that period. Crude oil also
declined, with the CLZ5 -2.7%. The index proxy volume for the SPY, QQQQ and DIA
was all below their average volume as evidenced by the SPY, which traded 30%
below its 77 million average volume. This highlights the program participation
in yesterday’s afternoon advance. I repeat what I have said in previous
commentaries–that the quasi-index mutual funds don’t have to mark up individual
stocks as much and can just initiate SPX buy programs to inflate their very weak
2005 numbers.
Until that 2:10 PM SPX
Slim Jim breakout there was nothing much to do in the SPY/futures. However,
that wasn’t the case for the SMH, which traded down to a 35.65 intraday low on
the 10:00 AM bar, taking out Wednesday’s 35.70 low. This set up an RST long
trade (contra move) with entry above 35.76 (see chart). The SMH traded up to a
36.18 intraday high and closed at 36.11, +0.5% on the day. The short
strategy–should the SPX 1246 and SPY 124.74 highs get taken–out is explained
in today’s
Inner Circle email.
Have a good trading day,
Kevin Haggerty
