Quarter’s End — Thank Goodness

March 30, 2001
Kevin Haggerty

Getting back to the real
world, yesterday was an excellent daytraders’ venue especially if you were in
the SPYs, DIAs and/or QQQs. The SPX only finished off -0.5%, the NDX 100 -2.3%,
while the Dow ended +0.1% — but that didn’t tell the story. The SPX and DIAs
were very geometric as each gave you four excellent defined-pattern entries, two
on the buy side and two on the sell.

The SPX started with the
Trap Door for the first buy, then an extension high short after the rally to
1162. You have to refer to the 1157.35 late-in-the-day high on Wednesday to have
caught it. There was a continuation short below 1153 from a clearly defined
triangle which traded down to the 1136.26 bar which gave you a reversal entry
pattern to buy the mark-up into the close. The inflection point was at 1136.53
which was the 1.27 extension of the Trap Door 1141.88-1161.69 leg up after
the early emotional selling. (The more things change, the more they stay the
same.)

The Dow had essentially the
same sequence with different extensions and the last buy was from a Double
Bottom and a basic reversal bar pattern. Save
a two-day five-minute chart of the SPX and DJX and see if all four opportunities
jump out at you. My lesson next
week will be a very brief but valuable way to combine basic entry patterns and
some inflection points. This is just an insight into sequence trading and
anticipation that I taught at the seminar in Naples, Fla., and won’t again until
the next seminar.

Today’s plan: Stay with the
QQQs, DIAs and SPYs today. Turn off the empty suits on TV today, in addition to
any Dow Jones, Reuters or Bloomberg news and try trading them as you see them.
Not only will you be more profitable, but your learning curve will accelerate.
If you can combine that with being flat
at day’s end and capable of hitting the ejection button, you will win.

Start the second quarter
with the goal of learning about options strategies so you can take defined-risk
positions and the many other benefits of using options in your trading. Tony
Saliba has put together an excellent options seminar
presentation in Chicago,
April 20-22. I consider it a
“must do” if possible, for all who really want to learn from one of
the best. I have decided to attend
as a student, just like you, and I look forward to seeing you all there in the
audience.

(June
Futures)

Fair Value

Buy

Sell

9.10

10.45

7.30

Pattern
Setups

Have
a good trading day.

Quarter’s End — Thank Goodness

BUY THE FEAR, SELL THE GREED

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