Here’s Why There Should Be Some Good Volatility Band Trades Today
What Wednesday’s Action Tells
You
The overhype on the earnings reports and economic
numbers continues to be a trader’s friend. What are they going to be? Who cares?
That’s a sucker’s game. What do they mean, and are they real? Don’t know, but
95% of the rest of you don’t know either, and most everyone reacts with emotion
as the media hypes stories for ratings. This is what creates opportunity. The
short-term trade comes on the overreaction, not the prediction. Let the empty
suits take care of the predictions.
The E-mini S&Ps traded between 1122 – 1127.50
yesterday until a pullback to the 240 EMA at 1123 just after 12:00 p.m. ET,
then it was trend up to the intraday high of 1132.50, closing at 1131.25. Did
anybody really care about 1,000 jobs? The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1130.52,
+0.8% vs. the high rally close of 1131.92 on Jan. 8. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed
at 10,538, +1.1%, as some of the cyclicals bounced after four to six days down.
For example,
(
DD |
Quote |
Chart |
News |
PowerRating) reflexed off the 50-day EMA, as did
(
AA |
Quote |
Chart |
News |
PowerRating) now in an inside
pattern just above the 50-day EMA. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) and
(
QQQ |
Quote |
Chart |
News |
PowerRating)
were both in line with the SPX yesterday.
NYSE volume was 1.5 billion shares, and this
is
also an expiration week. The volume ratio was 75 with the 4 MA at 54 and
neutral
for the past four days. Breadth was +1189, which is the best so far this
year,
but because it is expiration, you don’t know the mix because of the
programs.
In the primary sectors, the only outperformer relative
to the SPX was the XBD at +1.6%, while on the other front, bonds advanced for
the third of the past four days with the
(
TLT |
Quote |
Chart |
News |
PowerRating)s +0.4% and the XAU -4.1%.
Waking up this morning, there are some nice profits in currency spreads if you
were long the US Dollar which has been trading down around the -2.0 volatility
band, while the Euro, Canadian Dollar and British Pound were extended out to
their +2.0 band and beyond.
size=2> |
Thursday
1/8 |
Friday
1/9 |
Monday
1/12 |
Tuesday
1/13 |
Wednesday
1/14 |
color=#0000ff>Index | |||||
color=#0000ff>SPX | |||||
color=#0000ff>High |
1131.92
|
1131.92
|
1127.85
|
1129.07
|
1130.75
|
color=#0000ff>Low |
1124.91
|
1120.90
|
1120.90
|
1115.19
|
1121.22
|
color=#0000ff>Close |
1131.92
|
1121.86
|
1127.23
|
1121.22
|
1130.52
|
color=#0000ff>% |
+0.5
|
-0.9
|
+0.5
|
-0.5
|
+0.8
|
color=#0000ff>Range |
7.0
|
11
|
7.0
|
13.9
|
9.5
|
color=#0000ff>% Range |
100
|
10
|
90
|
43
|
98
|
color=#0000ff>INDU |
10592
|
10459
|
10485
|
10427
|
10538
|
color=#0000ff>% |
+0.6
|
-1.3
|
+0.3
|
-0.6
|
+1.1
|
color=#0000ff>Nasdaq |
2100
|
2087
|
2112
|
2096
|
2111
|
color=#0000ff>% |
+1.1
|
-0.6
|
+1.2
|
-0.7
|
+0.7
|
color=#0000ff>QQQ |
38
|
37.74
|
38.35
|
37.95
|
38.25
|
color=#0000ff>% |
+0.9
|
-0.6
|
+1.6
|
-1.0
|
+0.8
|
color=#0000ff>NYSE |
|
|
|
|
|
color=#0000ff>T. VOL |
1.86
|
1.67
|
1.47
|
1.55
|
1.51
|
color=#0000ff>U. VOL |
1.25
|
615
|
914
|
608
|
1.11
|
color=#0000ff>D. VOL |
603
|
1.04
|
535
|
921
|
376
|
color=#0000ff>VR |
67
|
37
|
63
|
40
|
75
|
color=#0000ff>4 MA |
63
|
53
|
56
|
52
|
54
|
color=#0000ff>5 RSI |
91
|
60
|
67
|
55
|
67
|
color=#0000ff>ADV |
2033
|
1639
|
2079
|
1627
|
2236
|
color=#0000ff>DEC |
1254
|
1661
|
1230
|
1687
|
1047
|
color=#0000ff>A-D |
+779
|
-22
|
+849
|
-60
|
+1189
|
color=#0000ff>4 MA |
+582
|
+284
|
+460
|
+386
|
+489
|
color=#0000ff>SECTORS |
|
|
|
|
|
color=#0000ff>SMH |
+2.7
|
-0.2
|
+2.2
|
-2.4
|
-0.2
|
color=#0000ff>BKX |
+0.3
|
-0.4
|
-.01
|
-0.7
|
+0.8
|
color=#0000ff>XBD |
+0.1
|
-0.9
|
+1.1
|
-0.2
|
+1.6
|
color=#0000ff>RTH |
-1.3
|
-0.3
|
-0.3
|
+0.7 |
+0.8
|
color=#0000ff>CYC |
+1.2
|
-1.0
|
+0.6
|
-0.2
|
+0.8
|
color=#0000ff>PPH |
-0.8
|
-0.8
|
-0.1
|
-0.6
|
+0.1
|
color=#0000ff>OIH |
+2.1
|
+3.8
|
-0.7
|
-0.4
|
-1.6
|
color=#0000ff>BBH |
-1.2
|
-.04
|
-0.2
|
-0.2
|
+0.5
|
color=#0000ff>TLT |
-0.1
|
+1.8
|
-.08
|
+0.7
|
+0.4
|
color=#0000ff>XAU |
+0.6
|
+1.4
|
-1.7
|
-2.7
|
-4.1
|
^next^
For Active Traders
The trend up afternoon trade was in the E-minis
from the 240 EMA on the five-minute chart (which is the 20 EMA on the 60-minute
chart). As mentioned in the previous commentary, there was good two-way action
yesterday in the homebuilders. For example,
(
CTX |
Quote |
Chart |
News |
PowerRating) made a 1,2,3 lower top
of 99.94 at the 240 EMA and then declined. The 1,2,3 trend short entry was below
99.50, provided you did not take the initial entry. CTX traded down to 97.37
vs. a 97.41 sequence point, as per the last leg up. From that low, CTX rallied
to 100.19, closing at 99.85. It was a knife down below 99.50. If you didn’t
take a trade coming off the 97.37 low, there was an obvious Kings & Queens
reversal entry above 98.10, which was also the RST long entry. (The RST strategy
is in the TG
III seminar tapes/manual.)
The
(
SMH |
Quote |
Chart |
News |
PowerRating)s were -0.2% yesterday as
(
INTC |
Quote |
Chart |
News |
PowerRating) treaded water all day prior to the earnings report. It is my
favorite report because of all the hype that always surrounds it. It is the
rare
occasion you don’t get a good contra trade in INTC or other related semis
after
all the hype, that includes other market big-cap stocks also, most of the
time.
For Today
There should be some good volatility band trades
today relative to the 4:00 p.m. closes of various stocks yesterday because many
of these stocks did trade off after their regular 4:00 p.m. closes.
(
QLGC |
Quote |
Chart |
News |
PowerRating)
was -8.5% afterhours, while
(
AMAT |
Quote |
Chart |
News |
PowerRating) was -4.2%,
INTC -2.8%, all from the most active list. Also on that list was
(
YHOO |
Quote |
Chart |
News |
PowerRating)
-3.8% and
(
AAPL |
Quote |
Chart |
News |
PowerRating) -5.6%.
At 7:30 a.m. as I do this, the futures are
mixed,
with the S&P only -2.2 points, the Dow is +1 point and the Nasdaq -10.
The 8:30
a.m. economic reports will probably accelerate direction either way in a
hurry,
at least for the first five to 30 minutes, setting up the various First-Hour
module strategies. I can’t wait.
Have a good trading day,
Kevin Haggerty