Focus On The Contra Move

November 8, 2000
Kevin Haggerty

Not much
to say about yesterday as
volume was less than 900 million, as the election took front and center. Today
is probably a good day to go shopping and forget about daytrading.Â

There will probably be at
least one decent trading move today, due to retail emotion and the ability of
the market makers and specialists to give us the inevitable contra move —
which, by the way, has become the bread-and-butter for daytraders, just as long
as you are flat at the end of the day.Â Â

The first move for the S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) yesterday was down to the intraday low of 1423.26 on the 10:20 a.m.
bar. It then rallied 13 points to the intraday high of 1436.22 just before 1:00
p.m. The index then retraced .618 of the intraday move before rallying 5 points
from 3:45 p.m. into the close.

The
Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) played the same game, with a gap down opening, then trading
to a 3217.45 intraday low on the 10:20 a.m. bar before reversing and giving
daytraders an excellent trading move to the intraday high of 3300.26. The
professionals must have wanted to go vote early, so they were able to move it up
a quick 2.6% in just 15 bars. The
intraday high of 3304.38 on the NDX was in by the 11:35 a.m. bar.Â

Nice day, if you caught it!
From that high, the index traded very
geometrically as it retraced .618 of the move and then rallied 36 points into
the close.

Calculate your volatility
bands and frame the indexes and your stocks on both an intraday and daily basis.
The more things change, the more they
stay the same. Key alert levels
and identifying change in direction is what will reward you, and not reading the
3,001 trading books that have flooded the market recently.

Today might be very similar
to yesterday and possibly slower, so your early reaction to the contra move will
probably be your best opportunity.Â Watch
those stocks which are exhibiting the best or worst relative strength vs. the
initial move in the S&P 500 and the NDX 100 and be ready to capitalize
before you go shopping for the rest of the day.

face=”arial, helvetica”>(December Futures)
Fair Value	size=2>Buy	size=2>Sell
9.25	10.45	8.00

Pattern
Setups

Some stocks to look at that exhibited
some buying pressure yesterday are:

On the short side,
(
NEWP |
Quote |
Chart |
News |
PowerRating) sets up
right at the 200-day EMA, if you get trade-through entry only.

Have a good trading day.

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Focus On The Contra Move

BUY THE FEAR, SELL THE GREED

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