1st Hour Strategies Dominate Week

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? Click here for a free one-week trial to Kevin Haggerty's Professional Trading Service or call 888-484-8220 ext. 1.

The SPX has traded in a choppy range all week (see chart) between the lower end of the key price zone at 1514 and the 816 ema (previous commentary). It closed yesterday at 1512.75 (-.09%) but did make a new intraday cycle high at 1517.44 on the 3:05 PM bar. The 1st Hour strategies have been in play all week, set up by the pre-market futures games, and the inadequate electronic opening process. The longer-term intraday trend for daytraders is the 34 ema on a 120-minute chart, and converted to a 5-minute chart, it is the 816 ema, and has been the lower level for this choppy range all week. It is also a good level for swing traders to take early entry rather than above or below the previous day's range on a daily chart from a pullback setup. The QQQQ was -0.5% and $COMPX was -0.3%, but the "teflon" $INDU was -.08%, as it continues to be pushed higher by a handful of stocks each day. Program manipulation of a 30-stock price index is not rocket science for the "gang." Program trading is the major source of profits for many firms, with the exception of a busy M&A year, and these profits are not made by simply working an account's order to buy futures or sell stocks at a specific spread, versus fair value (reverse for buy programs).

Yesterday's price action was all energy, as the OIH was +2.4%, hitting an intraday high of 168.24, and closing at 167.30. The bull cycle high is 169.75, so that is a magnet that will probably get taken out before any significant reversal. I can't remember the last time when there was no strategy daytrading setup from the Trading Service energy focus list, and the intermediate key price reversals were all anticipated by using the primary tools of my "Core Framework." The $INDU and SPX are trading at the highs, while the $COMPX and QQQQ have pulled back to their 20-day ema zones, with the IWM at the 50-day ema. The blue chips, true to form, continue to lead the bull market to its final conclusion, and the short-term momentum (5 RSI) tells the same story, with the $INDU 77, SPX 65, QQQQ 47 and IWM 44.

Expiration Friday is usually not a great daytrading opportunity, as the price action can be erratic, with too much random price movement and little follow through. Even yesterday, NYSE volume was 1.46 billion shares, while the volume ratio was neutral at 50, but breadth negative at -735.

Have a good trading day,
Kevin Haggerty

Check out Kevin's strategies and more in the 1st Hour Reversals Module, Sequence Trading Module, Trading With The Generals 2004 and the 1-2-3 Trading Module.