How to gain the trading edge

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 $INDU (-0.4%) made a new low in this current decline and closed at 11,002, but above its 200-day EMA at 10,954. The SPX finished at 1263.83 (-0.1%) with the 200-day EMA at 1263.50. The initial symmetry zone for the Dow yesterday was 10,926 - 10,924, and that is where the Dow reversed for a +81-point gain. Traders also made money on the SPX reversal off the 1254.46 low (key price zone). 1255 - 1254 has symmetry with four different measurements in price and time, in addition to 233-day EMA just above at 1256.95. I consider a longer-term moving average zone to be the 200-233 DEMA spread. All of these anticipated key price and time zones are outlined daily in the Professional Trading Service, which makes it easy to pinpoint major and minor market reversals. Both the SPY and DIA were down to their -1.5 volatility band zones yesterday, so traders had the necessary information that supported a high-probability intraday reversal, and that is what happened. Energy, gold, copper and steel stocks all had continuation early weakness yesterday following the extended downside on Monday. This was perfect for traders, and there were some excellent RST and volatility band reversals in many of the key commodity-related stocks.
 
NYSE volume expanded to 1.89 billion shares with a volume ratio of 33 (1.26 billion shares down) and breadth -988. All of the primary sectors closed red except a marginal +0.2% gain for the (PPH | Quote | Chart | News | PowerRating). The (TLT | Quote | Chart | News | PowerRating) was +0.5%, and this helped NYSE breadth numbers, seeing that 35% of NYSE listed stocks are interest-rate sensitive.

There are a few positive momentum divergences setting up into the next time zone in a few days, so watch for a quick upside reflex. Failure here and a re-cross to the downside of the 200-233 EMA zone by the SPX and Dow will obviously accelerate the selling. Traders will continue to be profitable by taking advantage of extended volatility after reaction--and it doesn't matter whether they are up or down.

Have a good trading day,

Kevin Haggerty