Trade the overreactions
Kevin Haggerty is a full-time professional trader who was
head of trading for Fidelity Capital Markets for seven years. Would you like
Kevin to alert you of opportunities in stocks, the SPYs, QQQQs (and
more) for the next day’s trading?
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Three attempts this week
to take out 1294.90 SPX cycle high stalled at 1291.92, 1294.17
and 1293.84. That will get taken out before the next reversal. It has been an
excellent week so far for Trap Doors and RSTs, especially in the SPY, DIA and
energy stocks yesterday. Trading the overreactions to knee-jerk market action
from hyped news by the media is just what the trader wants. Reversal strategies
are the most profitable. The SPX was -0.4% yesterday at 1287.79, Dow -0.6% to
11,069, and QQQQ, -0.3% to 41.15. NYSE volume was 1.6 billion shares, volume
ratio 38 and breadth -443. The ST/OB condition has worked itself off with the
sideways action this week, as the 4 MA VR is now 50 and 4 MA breadth just +241.
The SMH was -1.5%, XAU, -3.3%, while the OIH was small green (+0.8%). The rest
of the primary sectors were in-line with the major indices. The leadership
depends on which hour you are checking it, as there are so many knee-jerk
reactions to announced news and rumors.
The market is underestimating the current Middle
East situation and potential disruptions to the United States. This means that
trading the overreactions continues to be a better risk profile than position
trading unless you are using options strategies. If you day trade individual
stocks, stay all over energy, gold and semis, because the volatility is
trader-friendly. If you are a major index trader, stay with retracements
and take a pass on breakouts of highs and lows. The SPX is range-bound for three
months and obviously not in trend trading condition.
Have a good trading day,
Kevin Haggerty
