Home On The (Trading) Range
After the early morning PPI euphoria yesterday, the S&P 500 cash broke to the downside around 10:30 AM ET out of a five-bar, narrow-range setup to trade just below yesterday’s low of 1386.80 (see a 15-minute chart). It immediately reversed on a wide-range bar and formed another five-bar trading range. It broke out of this one around 1:00 PM and traded to new intra-day highs.
The techs were strong all day, with many breaking to new highs, including the Semiconductor index (SOX) and the Morgan Stanley High-Tech index (MSH). The Dow finished down 27 as the overall volume was not exciting and breadth was barely positive. We now have a real consolidation range going in the S&P 500 cash: a seven-bar range where either the open or close are all within the range of one bar. The top of the range is 1407 and the bottom is 1384.93. Yesterday the S&P closed 1t 1398.15, right at the top of Wednesday’s range.
They had every chance to crack the market yesterday and didn’t, so it feels like a high try is in order. It doesn’t mean you forget the downside with the SPDRs if the S&P breaks 1384.93. Remember, we have another economic number dance today with the CPI. Maybe it will be better than yesterday’s early euphoria in the S&Ps and bonds, which quickly faded. It doesn’t really make a difference: If you’re truly day trading, you’re only reacting and are flat at the end of the day, right?
| Program Trading Numbers | ||
| Buy | Sell | Fair Value |
| 12.05 | 8.15 | 10.10 |
Target Stocks Of The Day  Watch for setups in Dell [DELL>DELL], Solectron [SLR>SLR], Nortel Networks [NT>NT], BMC Software [BMCS>BMCS], Comverse Technology [CMVT>CMVT], Go2Net [GNET>GNET], Intuit [INTU>INTU], Allergan [AGN>AGN], Gap [GPS>GPS] and Dollar Tree Stores [DLTR>DLTR].
Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his new series of tutorial articles.