In the final 3.5 hours of trading Friday we touched 109 three times on the SPY and 110.30 twice. Generally, this type of up down action does not instill much confidence in market participants, and many believe it is a sign of lower prices to come. I’m not in that camp. Someone definitely was dumping a couple of billion dollars worth of stock right at the end of the day, and caused the SPY to close right at the key 109.40 level. But I don’t think that means we trade much lower. Show me a close below 108 and I will reconsider.
Next week I will continue to watch the market leaders and other momentum names to see how they hold up. Some of the names on my list include AAPL, GS, BIDU, CSTR, SNDK, NFLX, VMW, WYNN, CLF, and FCX. If leaders such as AAPL and BIDU break to the upside that is a check in favor of the bulls. If commodity names such as CLF and FCX that have finally broken their long term down trends move higher that will be a second check for the bulls. And finally, if momentum stocks such as NFLX, VMW, and CSTR continue to squeeze the shorts then we have a recipe for much higher prices.
I am looking for a close above 112 to confirm that the market continues to trend higher.
And if you want some evidence that this market continues to offer amazing opportunities to short term traders then look at the AAPL chart from yesterday. After selling off to 253.50, which erased the entire overnight gap from Thursday it proceeded to trade all the way back up to 259.
11 Comments on “Intraday Reversals Indicate What?”
Bella:
Shorting AAPL at 259.0 at the close would have been a great instant gratification trade when the spy brokedown.
How would you rate the trade on aapl at 2:07pm, when it essentially made a double bottom at 253.6 and finished the gapfill. At the same time spy failed to break below 109.0. Is this an A,B,C trade? Is this an intraday reversal trade? The market and aapl seemed weak until that point, checks that would not favour a long at 253.6.
I miss out on trades that have conflicting checks or lack a clear catalyst (you essentially have to bet on a market reversal after it stuck its head below 109, and yesterday’s close certainly is not a solid level).
Tapetrader
Bella:
Shorting AAPL at 259.0 at the close would have been a great instant gratification trade when the spy brokedown.
How would you rate the trade on aapl at 2:07pm, when it essentially made a double bottom at 253.6 and finished the gapfill. At the same time spy failed to break below 109.0. Is this an A,B,C trade? Is this an intraday reversal trade? The market and aapl seemed weak until that point, checks that would not favour a long at 253.6.
I miss out on trades that have conflicting checks or lack a clear catalyst (you essentially have to bet on a market reversal after it stuck its head below 109, and yesterday’s close certainly is not a solid level).
Tapetrader
Bella:
Shorting AAPL at 259.0 at the close would have been a great instant gratification trade when the spy brokedown.
How would you rate the trade on aapl at 2:07pm, when it essentially made a double bottom at 253.6 and finished the gapfill. At the same time spy failed to break below 109.0. Is this an A,B,C trade? Is this an intraday reversal trade? The market and aapl seemed weak until that point, checks that would not favour a long at 253.6.
I miss out on trades that have conflicting checks or lack a clear catalyst (you essentially have to bet on a market reversal after it stuck its head below 109, and yesterday’s close certainly is not a solid level).
Tapetrader
Oops, the post is addressed to Steve.
Tapetrader
Oops, the post is addressed to Steve.
Tapetrader
Oops, the post is addressed to Steve.
Tapetrader
107.53…..time to “reconsider”
107.53…..time to “reconsider”
107.53…..time to “reconsider”
Tapetrader,
I actually made both of those trades. The short at 259 was because there was clear selling on the tape and then a large offer came lower on BATS to 258.90. The long from 253.60 was a bigger picture play as AAPL had filled the gap and was offering an opportunity for those wishing to jump on board in the morning who didn’t want to pay close to 260. The first time it touched that 253.60 level I was actually doing my StockTwits broadcast and was thankful it came back down a second time. It looked awful on the tape, but I believed it was a buy based on “intraday fundamentals”.
Steve
Richard,
Definitely time to reconsider. That is the great thing about being a short-term trader. You use the tape to help make better trading decisions.
This AM when we gapped down to 108 I figured there was a good chance we would rally to 109.50 as this has been the pattern on gap downs in the past two weeks.
Today’s close below 108 puts me on alert for a move down to 106 for tomorrow. I will again use 108 as in inflection point and see if we fail there on the open.
Steve