Going Into The Key Time Dates, I Like What I See

Yesterday's afternoon air pocket gave the SPX ($SPX.X | Quote | Chart | News | PowerRating) a 17.9-point daily range as it closed at 1113.64, -0.7%, having made an intraday low of 1109.63. The Dow ($INDU | Quote | Chart | News | PowerRating) at 10,002 was also -0.7%, while both the Nasdaq ($COMPQ | Quote | Chart | News | PowerRating), 1921, and the (QQQ | Quote | Chart | News | PowerRating), 35.61, were -0.2%.

The semis were the only sector to finish green with the (SMH | Quote | Chart | News | PowerRating) +1.8%, but having been up more than 4.0% before the afternoon program-accelerated SPX air pocket which broke price below minor support and the rising channel trendline from the 1061 low on 08/13. I have included that daily chart.

(INTC | Quote | Chart | News | PowerRating) managed to hold gains at +3.5%, while focus list stock (MRVL | Quote | Chart | News | PowerRating) was +4.7%.

NYSE volume expanded to 1.55 billion with a volume ratio of 25 and breadth -1142. This is what I want to see more of going into the latter part of this month and some key time dates.

For Active Traders

The early gap up in the major indices set up the Trap Doors right at Fib extension levels. It didn't matter whether you traded the (SPY | Quote | Chart | News | PowerRating), (DIA | Quote | Chart | News | PowerRating), QQQs or their futures. The gap up also took prices high enough to set up RST sell patterns along with the Trap Doors. This corner covered futures too soon on the contra move down because the semis were holding up and thought there would be a reflex move in the direction of the open. The SPX hit an 1127 high right at our 1128 - 1130 resistance outlined going into yesterday's trading.

The early cover was to be forgiven with another short opportunity as the afternoon flag breakout down below all the EMAs on the 1:15 p.m. ET bar took the SPX below its rising channel line and also below the 1115 - 1113 minor support level. The SPX traded to an 1109.63 intraday low, closing at 1113.64.

Today's Action

The 4 MA of the volume ratio is 34, while the breadth 4 MA is only -298 indicating the institutional program selling in big-cap stocks. The 5 RSI is 30.4, so were are getting close to that short-term oversold zone. A wash down to the 1100 - 1093 zone is the better scenario from these levels. Today's immediate upside SPX focus starts with the 89-day EMA at 1112.95, the 50-day EMA at 1115.18, which is also the rising trendline zone.

Yesterday's reversal was enough to quiet the futures this morning, as they are flat at 8:00 a.m., but I would hope that today would bring some more travel range.

Have a good trading day,

Kevin Haggerty

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