I'm curious whether you guys have any insights into the making of a potential intra-day rally. What are some technical catalysts that trigger them other than news (i.e. bailout packages, interest rates, etc.) Although I'm not a big fan of oscillators or indicators, what are good parameters for a day trader to predict a potential rally. From my observation, the majority of rallies historically happen after 3pm, though there have been many cases where they start as early as 1:30pm. Another clue that I have noticed is that there is usually one abnormal pop of the futures. I like to watch the S&P 500 cash index (.SPX) and if theres a instantaneous 3 point rally during a 12 point range trading day, its very bullish. If this occurs in a down trend, however, there must be a tight stop because failed rallies lead to steep falls.
I like watching the OIH and some of the large integrated oil companies like XOM and CVX. These stocks provide money managers with an excellent way of putting money to work given their large-cap index weightings and liquidity. If you don't believe me, simply look at the charts of XOM and CVX from October on, as crude oil was still plunging from $72 to $35. Happy New Year!
So when the largest cap oil stocks start going up, potentially making new highs, thats a bullish signal for you that the market will follow? According to one arbitrage firm, XOM is #1 and comprises over 5% of the S&P 500 futures. CVX is #6 on that list: http://www.indexarb.com/indexComponentWtsSP500.html Another major stock that I feel ignites the market is GS, although market cap is only 33 billion.
As much as I hate Cramer...this is a article I had read in the past and may be of interest to some of you. It was written in 2006 and in a obviously much different market environment, nevertheless. http://www.thestreet.com/funds/madmoneywrap/10290310.html