S&P 500 Corner - Part IV
Tips, Tricks & Techniques
for Day Traders
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The New York Lunch
At 12:00 noon in New York many traders on the floors of the stock exchanges break for lunch. This exodus to fulfill a natural need substantially reduces trading volume. This allows a number of reduced volume strategies to be played out in the markets by specialists and market makers.
There is one rule about the lunch hour: trust nothing you see. However, if a strong trend is in effect, a new impulse for this trend can begin at this hour. In the event that the dayís trend is not clear, counter-trend moves are more likely to occur here!
Excellent trading signals can be derived from divergences of the S&P 500 with other indicators based on market internals. Included is this class of indicators are:
The S&Ps often exhibit either a leading or lagging effect with the indicators above. The questions to ask yourself about the S&P/indicator relationships are:
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