Preparation

• Go to a computer and log on to a free charting service such as FreeStockCharts.com. Click the "New Chart" tab at the top of the screen twice. Two price charts will appear on your screen side-by-side. One will be your daily price chart and the other will be your five-minute intraday chart. Input the symbol for whichever derivative of the S&P 500 you are going to trade on each chart.
  
  

Tools of the Trade

• Input the RSI (Relative Strength Index) on the daily chart. Edit the settings on the on the RSI to a 2-period and the oversold reading to a 10 reading and below. When the S&P declines, resulting in an RSI oversold reading of 10 or below, you now have an oversold condition in the daily market that is the first stage of this open strategy for day trading. Make a note of where price closes on this day, because that will be your entry point for the following opening.
  
  

Pulling the Trigger

• Prepare to enter the trade for the following day's opening proceeding when the daily price chart registers an oversold reading as outlined above. When price opens, it must trade lower than the previous day's close, and the moment it trades up through that price point, enter the trade. As the market is oversold at this level, then price should snap back strongly, allowing you to make a quick profit.
  
  

Final Thoughts

• This strategy can be used for trades on the S&P 500 and also any derivative of the S&P, such as the futures, ETFs, options or the e-minis. The strategy is effective when the S&P 500 declines to an extreme oversold position, which creates a lot of pressure on the buyers. Eventually, the buyers start selling their positions to prevent further losses, but this selling causes a quick snapback in price because the market is so oversold. This is where the opportunity lies for the day trader.