If You Understand The Drill, You Had A Good Day
What Wednesday’s Action Tells
You
It was an expanding volatility day, but at
the
close volatility had reverted to the mean as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed
at
1210.08, just -.33 from the previous day. The intraday high was 1215.76,
still
below the rally high of 1217.90. The
(
SPY |
Quote |
Chart |
News |
PowerRating) traded to 121.93 vs. the old
high
of 121.76. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed down 18 points (-0.2%) to 10,812
after
hitting a new rally high of 10,870. The
(
QQQQ |
Quote |
Chart |
News |
PowerRating) was essentially flat at
37.61 vs. the previous day’s 37.63. The internals finished neutral with the
volume ratio 49 and breadth -248. In the sectors, the
(
SMH |
Quote |
Chart |
News |
PowerRating) was -1.4%
and
the BKX, RTH and CYC all small red. The
(
OIH |
Quote |
Chart |
News |
PowerRating) and the XAU led the upside
at
+1.2% and +1.3% with the XBD +0.5%.
It was an excellent trading day for the
S&P 500
(futures/SPY). The day started with a
Trap
Door low of 120.65 vs. the 1.0
volatility band at 120.64 and the 120.66 Fib extension of the afternoon leg
up
on Tuesday. It was also an
RST buy setup. This trade carried up to 121.93
vs.
the +1.0 volatility band of 122.04 and Fib extension at 121.88. This RST
reversal trade declined to 120.92 before closing at 121.17. The
sequence
trading
method caught both trends with entry at the lowest common denominators of
each
leg. What more is there to say? The
(
DIA |
Quote |
Chart |
News |
PowerRating) had the same three setups,
while
the QQQQ had the initial Trap Door, but it was not an RST, nor did it have
initial sequence confluence as did the SPY and DIA. The SMH also had the
Trap
Door and both
RSTs, so a good day was had by all the traders that understand
the
drill.
The futures are to the green side, and the
SPX is
at the current extended zone of 1220 – 1235, and it is also a time zone,
03/08,
+/- two days, so if you plan on buying strength, you had better have a very
tight stop. This corner will be on the other side of that
emotion.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.
