Intraday Trend Versus Reversal Trading
Kevin Haggerty is a full-time
professional trader who was head of trading for Fidelity Capital Markets for
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The major indexes closed higher for the 3rd day,
with the SPX bouncing off a 1476.70 low on Tuesday, to close yesterday at
1502.39 +0.4%. The $INDU was +0.2% to 13241, and the QQQQ was +0.4% to 46.59.
May 2nd was the 1st day of the current time period. NYSE volume was the lowest
of the week so far at 1.58 billion shares, while the volume ratio was positive
at 65, versus 82 the previous day, and breadth +496, versus +1644 on Wednesday.
There was a lack of selling pressure, as a smaller amount of big cap stocks
carried the SPX higher. The 1533 3/24/00 SPX top is just a few buy programs
and/or PPT accelerations away, so the assumption has to be that it gets taken
out before this spike rally from 1364 (1370-1365 key price and time zone)
terminates. The energy sector continues to advance, and is also a daytrader’s
gold mine, with the high intraday volatility and strong daily trend. The OIH
made a new 161.58 high yesterday (161.20 close) versus the 1/11/07 125.81 low,
and is +28.4% year to date. The OIH cycle high is 169.75, and it looks like
"they" will certainly make a run at that.
Traders had a quiet day in the major indexes
yesterday, as the SPX traded sideways from the 10:55 AM 1502.91 high into the
1502.39 close. There was an initial Gap Pull Back setup for bullish traders on
the 9:45 AM 1496.94 low bar, if you anticipated a breakout of the previous day’s
high, which was also a new high. There were RST strategy trades in focus list
stocks like MER and NUE, in addition to FCX, and also the range breakout in the
OIH, which also meant other opportunities in component stocks. The
inefficiencies of the electronic market opening process, and subsequent
algorithm adjustments by the generals to these extended opening period moves,
has only 1 primary beneficiary, and this is the daytrader’s, the very group
"they" would like to eliminate. Intraday reversal strategies have increased
ten-fold due to the inefficient pricing. The one that is hurt the most is the
retail investor, which is the very one the regulators claim they want to help.
Same old, same old. Intraday trend trading carries far more risk in the current
market environment, and this will only increase, as algorithms and program
trading continue to drive the intraday price swings.
Just like last April, the jobs number will
probably be inflated, and interpreted as positive, so this will probably set up
Volatility Band shorts in the major indexes today. As I complete this at 8:15
AM, the S&P futures are +6, so the game is on.
Have a good trading
day,
Kevin Haggerty
Check out Kevin’s
strategies and more in the
1st Hour Reversals Module,
Sequence Trading Module,
Trading With The Generals 2004 and the
1-2-3 Trading Module.