The Trading Opportunities Are There…Here’s How To Find Them

April 9, 2003
Kevin Haggerty

The
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) made a new low daily range for the year yesterday
at 8.4 points, just under Friday’s 8.5
points. It closed at 878.29, just 1.6 points below the previous close. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed at 8299, off 1.5 points. The pre-opening green futures
turned red early on, as the SPX traded down to the intraday low of 874.68 on the
10:30 a.m. ET bar.

There were some early
stock plays, like the Trap Door in
(
KLAC |
Quote |
Chart |
News |
PowerRating), then a 1,2,3 higher bottom in
(
IBM |
Quote |
Chart |
News |
PowerRating) with entry above 79.63, which ran quickly to 80.40, before going
sideways for the rest of the day. In the biotechs, there were similar plays for
.75 to a buck, like the inside bar setup and then the opening reversal in
(
DNA |
Quote |
Chart |
News |
PowerRating). Another example from the scroll list mentioned in the previous
commentary was the 1,2,3 higher bottom in
(
APOL |
Quote |
Chart |
News |
PowerRating) with entry above 50.34,
which ran .85. They are not moonshots, but the point I am making to you is that
even if the major indices/futures are not giving you a good travel range day,
there will be trading opportunities in many individual stocks, but you have to
constantly scroll through your list, which should be pretty inclusive. This will
give you the multiple trade side of the Trader’s Equation, which is explained in
my initial
daytrading primer on the TradingMarkets site.

With that narrow SPX
range yesterday, the NYSE volume dropped to 1.2 billion, a volume ratio of 36,
and breadth -353. In the sectors, the semis led, with the
(
SMH |
Quote |
Chart |
News |
PowerRating)s down over
3.0%. If you look at that

three-month linear regression chart from the other day, you know the major
indices are just below the upper resistance and also their 200-day moving
averages.

If you do the same thing
today with the VIX, which closed at 29.59 and right at the bottom of the channel
and just about 10% below its 10-day moving average, you should be aware the that
air pocket potential on the downside is in play. It will take some legitimate
Iraq news and not the constant unsubstantiated media dribble all day in order to
push back up to the high end of resistance over the next few days. It would be a
futures-induced move. The bottom line is that the SPX is up 18% low to high in
just 19 days. The move the SPX made from the October 769 low was an RST, as was
this one from the March 12 789 low. You decide which end of the trading tree you
want to play the game from, but you’re not going to do it from the fundamental
side alone, because perception leads all moves.

I have included the
charts today for the multiple time frame trade explained in yesterday’s
commentary.

Have a good trading day.