Traders Win Big On Opening Trap Door Shorts And Afternoon Energy Stock Breakouts
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Led by IBM’s
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were gap-up openings across the board. IBM gapped open by +3.6 percent to 84.72
and hit its intraday high of 85.11 on the 9:35 AM EST bar, setting up the
no-brainer Trap Door short for daytraders below 84.71. It never challenged the
high again, closing at 83.70. The +3.0 Volatility Band yesterday for IBM was
84.92 vs. the 85.11 high.
As to what it does today, “Don’t know…don’t care.” But when
volatility gets extended like yesterday on the opening, there is a very high
probability there will be a contra-move which is what specialists, market makers
and good daytraders capitalize on. The most profitable and biggest joke
yesterday was International Paper
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collapsed into a 32.22 close. That was another no-brainer for professionals.
The SPX made its initial intraday high of 1229.45 on the 10:25
AM EST bar, then went sideways until 3:30 PM EST when it kicked up to 1230.34
and closing at 1229.35, +0.7%. The Dow was also +0.7% to 10,657 with the QQQQ
+1.1% and the Nasdaq +1.3%. New York Stock Exchange volume expanded some to 1.55
billion shares with volume ratio 68 and breadth +1289.
Daytraders had another big bonus day as the energy stocks were
exploded to the upside just before 1:00 PM EST with the OIH breaking to new
intraday highs and above the previous close on its way to a +4.0% gain with the
XLE +2.2%. There were obviously similar breakouts in the OIH component stocks
with gains between +2.0% to +4.0% from entry at their respective breakout
levels. Early and closing strength was concentrated in technology (SMH +1.6%),
basic materials (XLB +1.6%) and smallcap stock (IWM +1.4%). The TLT was 0.4% and
the U.S. Dollar +0.3% to 89.90 as it continues to stall at the 92 resistance
zone.
The early futures are red as Intel
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everyone happy. The S&P Futures are -2.5 points down, Dow -17 and Nasdaq -10,
but it is only 7:05 AM EST and will change on the early media hype. Good
daytraders couldn’t care less which way the hype gets the market extended
because they are ready to play the Trap Door contra moves which are the most
frequent First-Hour strategy in play during earnings season.