RST Traders Made Money, Did You?
What Wednesday’s Action Tells
You
The major indices gapped up early and the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) made its intraday high on the 11:25 a.m. ET bar at 1188.46,
then
traded in a 1.25 point range until the 1:35 p.m. knife down to 1178.66, and
then
closing at 1181.94, +0.6%, reversing the previous day’s -0.7%. The
five-minute
chart looks like a bell curve. Sequence traders caught that afternoon knife
down
for a very profitable day. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed back to
10,550, -0.6%,
vs. +0.6% on Tuesday. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was +1.0% to 2100, while
the
(
QQQ |
Quote |
Chart |
News |
PowerRating) made a new closing high to 39.10, +1.4%, with the
(
SMH |
Quote |
Chart |
News |
PowerRating)
certainly
helping at +2.3%. The
(
OIH |
Quote |
Chart |
News |
PowerRating) was +1.7% and once again provided daytraders
with opportunity, while the XBD ended at +1.5%. Net net, it was semis,
energy,
gold (XAU +1.5%) and brokers leading the green sector teams. The
(
TLT |
Quote |
Chart |
News |
PowerRating)
was
+0.9% and is again approaching short levels.
For Active
Traders
The
(
DIA |
Quote |
Chart |
News |
PowerRating),
(
SPY |
Quote |
Chart |
News |
PowerRating) and QQQ all gapped
up
into narrow-range patterns that broke out to the upside on the 10:05 a.m.
bar,
and traders who took that made some money with the SPY trading up to 119.13
from
118.61. The DIAs went from 105.75 to 106.26 and the QQQ from 38.95 to 39.32.
This corner had no interest in those trades because the SPX price was
approaching the 1191 sequence level of the 1163 – 1061 leg, and the short
bias
was preferred because it is a key time date. Yesterday’s +2.0 volatility
band
was 1189.96, and the SPX made an 1188.46 high. This set up the RST sell on
the
ESZ4 which resulted in a total profit range of +9 points from entry.
The SMH traded to a 34.72 intraday high
yesterday, closing at 34.30, +2.3%. The volume was just average as price
traded
through the 33.84 – 34.06 200-/233-day EMAs and right at the upper channel
line
of a +25% 51-day move (so far) off the 09/07/04 27.78 intraday low. The .382
retracement to the 45.78 high is 34.66, so this is a key price zone for the
SMH.
The last five days up for the SMH, +9.1%, has bolstered the SPX and the
QQQ.
Today’s
Action
The SPX is in another four-day pattern,
closing
yesterday at 1181.94. The early initial upside level for daytraders is last
Friday’s high close of 1184.17, not yesterday’s 1188.46 high. The immediate
minor support is the 1171 level. 1191 remains the current significant upside
level as the market hits new levels in almost a vertical ascent off the 1090
low. As a result, the trading gets erratic and overreacts to any new bit of
news. Also, many of the aggressive hedge funds, for which “long term is
after
lunch,” have one foot out the door and a finger on the trigger to lock
in any
short-term profits at the hint of any negative news. This current rally from
1090 has been a major plus for these hedge funds that derive a significant
share
of their profits from the fund. They will push the envelope if they can, but
are
certainly not “buy and hold” because of any fundamentals. Net net,
don’t chase
long positions at these index levels. Stay with the daytrades.
Have a good trading day,
Kevin Haggerty
Trade with Kevin for a year.
Click here.