Trading a Wining Strategy
From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.
Traders that are familiar with the RST strategy had a real bonus the last two days. When the SPX took out the 1100.17 high with the 1101.36 high on Wednesday, it set up the RST sell strategy. The entry was below 1099.71, which was a very low common denominator entry because of the stop just above the 1101.36 high. The entry was never challenged, and the SPX had an “air pocket” in the last hour as it traded down to 1080.77, which was a nice day at the office for day traders.
It didn’t stop there, because the SPX traded down to 1074.31 on the 10:00 AM bar yesterday, and that set up the RST buy strategy, with the entry above 1078.03 that ran to 1095.21 before closing at 1092.91. The morning markets are by far the productive for day traders, because that is when the public is most involved, and the emotions run high after many of the inane economic or financial reports that get so hyped by the empty suits on CNBC. The RST strategy is a goldmine for traders, and is available in both the “Sequence Trading” and “Trading with the Generals” modules on the TradingMarkets’ site.
The SPX was +1.1% to 1092.10 yesterday, on NYSE volume of 1.3 bill shs, with the Volume Ratio at 74, and breadth +1054. Â In the previous commentary, I said the market was obviously very extended as it approached the key price zone at 1121 (.50RT 1576-667) with the 1101.17 high on 10/19, and that the odds favor a short-term reversal. The SPX made a 1074.31 low yesterday which is -2.4% from that 10/20 high, or -2.5% from the 10/22 1101.36 high.
It is month end next week, and it was anticipated that the Generals would keep any short-term reversal from accelerating in front of month end, and that the Generals would mark up their portfolios the last three days of the month because, “if they can they will”.
Have a good trading day!
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