Ready For Round Two?
You forget just how tiring these trading sessions
can be when you have such extreme volatility. The focus required is
mentally draining, but naturally, worth all the effort. So, do we get another
stellar trading day today? Not sure. We will just have to wait and see.
I trust everyone stepped up and was more assertive yesterday. If not, you did
not fully capitalize. Whenever you have a day like yesterday, it is imperative
to grab all you can, simply because it is there for the taking. The opening,
true to the market’s nature, as well as comments
from Kevin Haggerty, offered some excellent opening reversal trades.
I was mainly focused on Citigroup
(
C |
Quote |
Chart |
News |
PowerRating)
early on from purely an HVT standpoint. Not
only did it gap down, it then offered multiple re-entries on the climb back up.
Refer to the chart below:
Point A: This was really just an entry
that goes against all the trades I normally do. It was completely against the
trend. However, yesterday was a special situation, and it required me to break
the rules. Once the S&Ps could not seem to find lower ground, you could
sense that the market was going to pop. There were other signs as well,
oscillators oversold, as well as the S&Ps sitting on a KTN
at 948. These opening reversal moves are quick.
Point B: Again, a rule breaker, but is
was a pullback in a market that was consumed by buyers in the S&P pit. These
are trades you learn over time. It boils down to old-fashioned tape reading.
Point C: This represents the staple short
sale trade in a downtrend. The slope of the moving average is clearly down, and
we have a little price exhaustion accompanied by a rollover in the S&P
futures.
Point D: Again, the same as Point C, this
time with an extra reason to take the trade and increase share size. The $37.74
level was identified before the opening as a potential support/resistance number
for the day ahead. In this scenario, it is resistance. Additionally, you have
the standard setup developing anyway, so this nugget of information should
compel you to take the trade.
Point E: same as C
For those of you who focus more on Nasdaq stocks, the one-minute chart of Applied
Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating) illustrates a trade that would normally be seen
as picking a bottom or catching a safe, when in actuality it was a well thought
out trade provided you used a tight protective stop.
It appears that the economic numbers that came out at 8:30 AM EST have put a
nice bid on the tape this morning. We may very well have the opposite effect of
yesterday, meaning opening reversals, this time on the short side. However,
given how oversold the market is, and with many still wildly bullish, it may
just feed on itself to the upside. Either way, don’ try to outguess the markets,
just go with the flow, it makes it so much easier.
There will be no KTNs this morning.
They will resume tomorrow.
I will be in TradersWire this afternoon
at 4:30 PM EST for an interview as well as questions. This is open to all
TradingMarkets members, not just subscribers to TradersWire.
As always, feel free to send me your comments and questions.