Sequence Traders Catch Both Intraday Trends

There was an SPX Trap Door/1,2,3 HB entry above 1195.72 on the 10:20 a.m. ET bar that advanced sharply to 1206.02 on the 11:00 a.m. bar. A three-bar reversal below 1204.59 took you out of the trade as the SPX ($SPX.X | Quote | Chart | News | PowerRating) traded down to 1198.24 and closed at 1200.82, +0.2% (see chart). This was the fourth day that the SPX has closed in that 1202.79 - 1191.09 range. The good window of opportunity for futures/(SPY | Quote | Chart | News | PowerRating) traders consisted of five bars from 10:20 a.m. to 11:00 a.m. and then the next trend was down, but traders were able to catch it because of all the sequence.

NYSE volume remained on the light side at 1.27 billion shares, but the volume ratio was 68 and breadth +537. The Dow ($INDU | Quote | Chart | News | PowerRating) finished at 10,523, +10 points (+0.09%), with the (QQQQ | Quote | Chart | News | PowerRating) +0.5% to 37.73 and the Nasdaq ($COMPQ | Quote | Chart | News | PowerRating), 2069, +0.3%. The financials (BKX, XBD) and semis (SMH | Quote | Chart | News | PowerRating) closed small to the red side, while the XLB was +0.6% and (OIH | Quote | Chart | News | PowerRating) +0.5%. Gold continued its reflex up with the $HUI +1.4% and XAU +1.2%. (NEM | Quote | Chart | News | PowerRating), the 1,2,3 HB entry from last week, had another up day at +1.2%, closing at 38.50 with a 38.80 intraday high. There were also some good energy intraday long setups at the 240 EMAs (five-minute chart), like (APC | Quote | Chart | News | PowerRating), Trap Door/1,2,3 HB, and (BHI | Quote | Chart | News | PowerRating), RST, in addition to a daily chart contracted volatility breakout by (HCA | Quote | Chart | News | PowerRating). These are all "Above the Line" stocks.

The (TLT | Quote | Chart | News | PowerRating) was -0.6% with the second entry below 96.05 the other day now in the money, with the TLT closing at 94.32. The initial RST entry was below 94.18 which declined to 93.54 in three days, then reversed above 94.65 (5-point-bar-high stop). The TLT proceeded to trade up to a 97 high - 95.20 low wide-range bar on 06/03/05. There was a 1,2,3 Close entry below 96.05 on 06/09/05. (This trade sequence will be discussed at Tuesday's Inner Circle meeting.)

The QQQQ is still trading around the 20-day EMA of 37.58 with yesterday's close at 37.73 and an intraday low of 37.46. Some of you traders played the upside re-cross yesterday from a breakout above the day's initial 12-bar-range high of 37.63 (see chart). The XLB closed right on its 200-day EMA of 28.31, but did hit an intraday high of 28.50. If the basic industry stocks get a play today, I would look to "Above the Line" stocks in that sector like (ROH | Quote | Chart | News | PowerRating) and (APD | Quote | Chart | News | PowerRating) for any intraday setups.

Inner Circle traders -- If you took both the Trap Door/1,2,3 HB SPY entry above 119.95, then reversed and went short below 120.91 after the 121.08 high, you caught both of yesterday's moves. The current rally SPY high is 121.25 and yesterday's high, 121.08, was the RST fifth point on a wide-range bar and also the 1.414 Fib extension of the 120.65 - 119.60 leg. Your short cover was on the reversal bars at the 240 EMA.

Have a good trading day,

Kevin Haggerty

P.S. I will be referring to some charts here: www.thechartstore.com in the future.