RST Strategy Keys Energy Trade Yesterday

(
$SPX.X |
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PowerRating) until a 2:00 p.m. ET program spurt from a 1233.20 Slim Jim

breakout that ran to 1237.64, closing at 1236.79, +0.5%. Until the 2:00 p.m.

move, the SPX had traded in a 4.2 point range between 1234.32 – 1230.15, so

there was nothing for traders to act on prior to the breakout of the Slim Jim.

The Dow
(
$INDU |
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PowerRating) finished at 10,637, +0.5%,
(
QQQQ |
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PowerRating) 39.72, +0.8%, and

the Nasdaq
(
$COMPQ |
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PowerRating) +0.5% to 2186. NYSE volume was 1.47 billion shares,

the volume ratio 55 and breadth +289. The primary sectors were led by the PPH,

+1.7%, which closed at 72.98.
(
JNJ |
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PowerRating) was +3.0%,
(
PFE |
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PowerRating) +1.8%,
(
MRK |
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PowerRating)

+1.7% and
(
BMY |
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PowerRating) +1.4%. The semiconductors led the red sectors with the

(
SMH |
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PowerRating) -1.2% followed by the BKX -0.5%. The SMH, if you refer to your daily

challenging the 12/15/04 40.68 bull cycle high. It is beyond the .786

retracement to 40.68, which is 39.32, so that 40.68 magnet should get taken out.

The breakout of the four-day flag (see daily chart) was above 39.53, which you

can see on the five-minute chart. The 2:00 p.m. program breakout only advanced

+0.6% to 39.76, closing at 39.72. The better trade was the
(
OIH |
Quote |
Chart |
News |
PowerRating) which broke

out below the Flip Top low of 112.46 and traded down to the 240 EMA and 111.03

intraday low which then set up the RST long entry above 111.51. This trade

advanced +2.2% from entry to the 113.49 high, closing at 113.47, +0.8% on the

day. I would say
RST traders had a significant edge. If you trade the OIH both

ways, you also had the initial Flip Top short. Because the OIH is an ATL (“Above

the Line”) stock, you would not take the Flip Top short unless the OIH is

something you trade on a regular basis. The same thing applies to individual

stocks. By adhering to this discipline, you have a higher probability of trade

success. The five-minute chart shows the Flip Top short entry and the RST long

entry, but not the full RST pattern which can be learned in the
seminar material

and
Sequence Module. It is simply the most powerful reversal strategy in any

timeframe or market, especially when combined with the primary tools that are