3 strategies for daytraders

The XAU has declined -16.1% high to low the past four days. It had been on a
tear since 3/10/06 (+41% in 43 days). This advance by the XAU preceded the sharp
decline in the U.S. Dollar from 90.40 to 83.61 on Monday which started the first
week of April. Sharp declines in the U.S. Dollar with gold advancing is the
norm. The U.S. Dollar Index yesterday closed at 84.19 following an outside
reversal bar off the 83.61 low on Monday. This decline in gold might be an
indication of the next oversold rally in the U.S. Dollar because there is
considerable symmetry (Fibonacci retracements / extensions and square of 9) at
83.61, 83.37, 83.23, and 83.02, so it is a higher probability reversal zone.
Many of the multi-national stocks advanced sharply in concert with the current
decline in the dollar.

The 4-MA of the volume ratio last Friday was 31 and breadth -1067. After
Monday’s intraday reversal from SPX 1284.51 to a 1294.50 close they went out at
29 and -1176. This usually results in strong continuation opening move the next
day. However, although the SPX did open up, it hit the intraday 1297.89 high on
the 9:35 AM EST bar before declining to the day’s low, 1288.51 and closed at
1292.08. The internals were neutral yesterday with a volume ratio of 47 and
breadth +180 on NYSE volume of 1.68 billion shares. The 4 MAs and the volume
ratio and breadth remain short-term oversold at 30 and -1043. This is an option
expiration week and that will come into play but the daytrader, weakness in the
SPX below 1289 through 1279 will set up an excellent contra move and if not, the
bias still remains up as the market works off the short-term oversold condition.

Have a good trading day.