Trading By The Numbers
Yesterday, early morning fear in the bonds and weakness in the S&P futures set the tone for a down-trending day. The short-term directional change continued as the S&P 500 fell below both its 50-day moving average of 1316.32 and the June 8 low of 1312.89 (the intraday low was 1293.10).
The SPDR opened at 131 7/16, below both its 50-day moving average of 131.96 and the June 8 low of 131.59. You couldn’t have a more overt signal than that. The high was 131.46 right after the opening and the intraday SPDR low was 129.59. If you made the SPDR or E-Mini sale, congratulations.
Key point: The first significant low in the SPDR was 129.75 at approximately 1:30 PM ET, after which it traded up to 130.47, a same day prior short sale opportunity on a 1-2-3 pattern. The SPDR then sold off, took out the 129.75 low, and made a final low of 129.59 before reversing the 129.75 prior low and trading up to 131 by the close. This was an excellent reversal trade after a search-and-destroy mission. Save the five-minute chart for reference. I’ve shown you this trade before, but I’ll always reinforce it, because it works for both stock and indexes.
At 3:25 PM, the Dow was off 162 points and the S&P was off 25. The programs kicked in at 3:30 and by 3:35, the Dow was off only 105 and the S&P was only off 18. It’s very interesting that when we get to edge of what appears to be a crash or mini-crash day, the programs come in out of the blue. Some day I will confirm my suspicions.
Institutions create trending days and strong support, not 10-minute explosions in the averages.
Target Stocks Of The Day  The following stocks look interesting: Customtracks [CUST>CUST], Exodus [EXDS>EXDS], Qualcomm [QCOM>QCOM], United International Holdings [UIHIA>UIHIA], VISX [VISX>VISX], Broadvision [BVSN>BVSN], Jabil Circuit [JBL>JBL], Apple [AAPL>AAPL], EMC [EMC>EMC], and Hewlett Packard [HWP>HWP].
Program trading numbers  Buy: 16.05. Sell: 12.10. Fair Value: 14.00. (These numbers use the September futures contract.)
Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his new series of tutorial articles.