Traders win on long side after Thursday’s SPX low taken out
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
The major indices declined early yesterday
but daytraders were able to capitalize on a primary RST long entry when
Monday’s SPX
(
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which was the 3 PM signal bar with long RST entry above 1202.03. This was good
for over 6 points to 1208.66 before closing at 1208.41, -0.3%. The SPY
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declined again to 120.39, which is the .38 retracement zone (120.46) to the
04/08/05 113.53 low from the 124.74 bull cycle high of 08/03/5. This significant
high preceded the key time date of 08/05/05 by two days. Those of you who have
learned the RST strategy realized that there was also a valid pattern setting up
when the 11:15 AM bar with at 1202.06 low was taken out, which had the same
entry above 1202.03. If you trade the DIA/YMs, you have the same RST long entry
above 103.57, which traded up to 104.14 before closing at 104. The Dow closed at
10,413, -0.5%, while the QQQQ
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NYSE volume expanded to 1.45 billion shares, with a volume ratio of 39 and
breadth -403. Based on the market action following the London bombing and
the past two days of Katrina, it appears there is some stabilizing going on in
the market by the "powers that be." In the sectors, it was energy and
bonds to the upside, with the
(
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(
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downside was led by retail, with the
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as was the
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This scenario makes sense with the current oil situation followed by the
political decision to release oil reserves.
Liquidity is thin into the holiday, so prices can easily could be easily
pushed around and weakness could see some more stabilizing. This means to me
that there will be some random price movement in both directions. The SPY closed
at 121.05, right at the 89-day EMA level, which is 121.11, while the DIA
(104) closed below its 233/200-day EMAs at 104.22 – 104.51, which is also the
initial upside resistance. They are early focus points today. The best long side
major index trades for daytraders today will occur if yesterday’s lows are taken
out, where RSTs set up again. Initial upside intraday SPY resistance is
121.50 – 121.75. If you’ve made a decision to take an early holiday weekend,
that wouldn’t be a bad trade either.
Have a good trading day,
Kevin Haggerty