These Two Trades Appear Every Day At The Open
If you are one who looks to put in only a couple of
hours a day in front of the screens, this market is for you. For
several weeks now, the first two hours are where all the action is, at least on
an HVT basis. There is the occasional trade
in the afternoon, but by and large the “sweet spot” trades take place on the
open.
While many may welcome this reduced work schedule, others get anxious and
impulsive. There is not a thing you can do about it, so just accept it. There
are two trades that appear each day on the opening, being on the look-out for
them should help you maintain a consistent win/loss ratio:
1. Fade the Gap trades
2. Standard HVT pull-backs
The first trade is something I discuss in
my CD-Rom module. It is nothing more that taking advantage of fading gap up
or gap down openings. The idea is that there will be some sort of “regression
to the mean” in terms of the price relative to the moving average. These trades
require a little bit of finesse, but can be quite profitable.
The second trade most of you are all familiar with. The key is to not
confuse tradeable action versus noise. Let’s review the basics:
1. 3+ point “bursts” in the S&P futures off of moving averages or
consolidation areas.
2. Trade with the trend of the one minute chart
3. If there are no range expansion bars, simply step aside or push you time
frame out slightly, i.e. a 5-minute chart.
This last option is something I have frequently done over the years when the
action gets slow, especially as we head into the summer months, it allows you to
still remain active in the market without driving yourself nuts with the “noise”
on the 1-minute chart.
It appears as though the market is taking comfort in the prospect of further
rate cuts by the Federal Reserve on the heels of the weak Beige Book data
yesterday. Will the 13th rate cut be the solution? I do not know about you but
that seems like a rather silly reason to by stocks, if 12 rate cuts of done
little, why would the 13th? But I digress, rather than trying to outsmart the
market, simply go with it and use tight stops, at least that keeps you in the
game and allows you to avoid too much thinking and not enough trading.
That being said, the two short positions mentioned in Monday’s column,
Digital River (DRIV) and
Mattel (MAT) may need to be covered today if
the market manages to hold on to the early morning gains.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and questions.
Dave