This Trade Worked Out Far Better Than I Would Have Ever Imagined
Call it chaos vs. order if you will, but the last few days are long overdue
for traders like myself. The intraday volatility spikes are what I thrive on. However, as we all know, the last few months have offered little to none of
this. Last week I mentioned in my column that I felt a bit rusty getting back
to such a rapid-fire manner, but just like riding a bicycle, you never forget.
Kevin Haggerty, in his column from yesterday, stated the following:
“From a daytrading standpoint, which is now controlled
totally by the Iraq action, I only have interest in very significant setups due
to some emotional reaction. With the hordes of media over there, which to me
makes no sense, there will be a wealth of misinformation that will create many
gyrations which are not trader friendly and will enable lots of futures
manipulation/games to occur. New traders would be better served to sit it out
today and Friday, which is also option expiration.”
Naturally, daytrading can be defined in many ways,
the way Kevin and I trade is very different. Sure, if you are a pure pattern
trader, the last few days have been as dry as the Iraqi desert. For me, while I
also look for patterns, the main drive is emotion and a lot of it, which has
been in abundance.
Let’s look at two trades from yesterday morning that
stand out as beneficiaries of this emotionally charged market.
The first trade, as denoted by X on the S&P chart,
was not very obvious, at least from the rules that I refer to in my column/book. Nonetheless, it was a
“solid” setup. Yes, the stochastic had already crossed to
the upside, but the entry was still valid simply due to a burst of buying in the
S&Ps which was notable on the tick chart and in the S&P pit. That thrust,
combined with the potential to take out an FN and knowing that moves in this
type of market “feed” on themselves, was the sole reason.
The same argument can be made by looking at
AIG, a good tracking
stock for the S&Ps. In this case, the potential to take out an
FN combined with the
move in the S&Ps was the trigger. This trade worked out far better than I
would have ever imagined.
The exit was based on the slowing momentum in the S&Ps
as well as AIG. Notice the closing price on the bar highlighted in the chart above, this one
closed lower than the opening, something the five previous bars had not done.
There is little doubt that the market is trading well,
the question is, from a longer-term standpoint, where now? The move higher has
exceeded some key resistance, 875 as of the pre-opening this morning. As long
as the war news continue to be positive, there is no point in trying to call the
top, just be aware of levels that may offer good HVT setups.Â
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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* indicates a level that is more significant
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