These high-probability strategies repeat on a daily basis
Kevin Haggerty is
the former head of trading for Fidelity Capital Markets. His column is
intended for more advanced traders. Kevin has trained thousands of traders
over the past decade. If you would like to be trained by him,
ext. 1
There was some “Time Week” volatility yesterday
as the SPX
(
SPX |
Quote |
Chart |
News |
PowerRating) range expanded to 9.4 points as it closed down -0.8% to
1231.20, as did the Dow to 10,597. The
(
QQQQ |
Quote |
Chart |
News |
PowerRating) was -0.3% to 39.63 and Nasdaq
(
COMPQ |
Quote |
Chart |
News |
PowerRating) -0.5% to 2172. NYSE volume expanded some to 1.49 billion shares
with a volume ratio of 26 and breadth -1262, so there was no question about the
supply/demand situation on the day. Contra to the major indices were the
(
SMH |
Quote |
Chart |
News |
PowerRating), +0.6%, led by
(
TXN |
Quote |
Chart |
News |
PowerRating), +2.6%, and the
(
TLT |
Quote |
Chart |
News |
PowerRating), +0.5%. An obvious
negative note was downside leadership in the $TRAN, -1.6%, XOI (consumer
discretionary), -1.5%, and the XLB (basic materials), -1.1%, as these economic
barometers continue to get sold on strength and failing to make new rally highs,
as did the SPX to 1245.86. Also closing red was the RTH, -2.0%, PPH, -1.0%, CYC,
-0.9%, and BKX, -0.8%.
Traders had both long and short trades in the
major indices yesterday because of the down/up/down travel range. The SPX traded
down to 1231.53 with the -1.28 volatility band at 1231.74 and gave traders a
simple head-and-shoulder entry above 1233.24, or else above 1232.07 for good
volatility band traders. This was the first contra rally of the day, and the
1231.53 low had a positive divergence in the 8,3,3 slow stochastic which I
prefer for the five-minute timeframe. The reversal ended at 1239.38, which is
the range resistance from Friday and Monday. The SPX reversed from there down to
a 1231.20 close. If you didn’t catch at least one of the two moves, go back to
the drawing board (see chart).
The QQQQ was an easier decision for traders with
a
1,2,3 HB (Higher Bottom) long entry above 39.59 which traded up to 39.91
before reversing on an
RST short entry below 39.85 down to 39.61. Once the 39.84
high was taken out, the RST was able to form. I have marked the pertinent swing
points, starting with 5, which is the 39.91 high. Net net, yesterday between the
SPX and QQQQ, you had a volatility band trade with simple pattern entry, in addition to the 1,2,3 HB and RST short reversals which are key strategies
taught in complete detail in the seminar material and sequence trading module.
They are high-probability strategies that repeat on a daily basis.
In addition to being a significant Fibonacci time
ratio week, it is also a big option expiration. I still call it Triple Witch
because stock futures are a non-event. This means traders must pick their spots,
and preferably on the contra side to any extended overreactions today.
Have a good trading day,
Kevin Haggerty
