Frame Those Alert Levels
Yesterday’s
pre-opening futures explosion carried through for
the entire day, as the SPX
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PowerRating) advanced +4.7% to close at 881.27,
which extended it beyond its 50-day EMA of 869 and the .50 retracement to 965 at
867. The .618 retracement to 965 is 890, so as mentioned in Friday’s
commentary, it is a zone of resistance. The SPX has advanced +14.7 low to
high, +13.4% from our first entry on a reversal of the 776 July low, and +9.2%
from the RST entry, which the Dow
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PowerRating) had also. This move from the
high-probability zone has included two wide-range-bar days, a pause day, then
another wide-range-bar day, with the daily range once again above the previous
day’s high. If the early red for the futures holds, then the 50-day EMA for the
major indices becomes a downside pivot and profit-taking level for those of us
that got on the train early, and is now setting up a possible short decision on
a trade-through and re-cross of the 50-day EMA to the downside. As I said yesterday,
you can’t play a bounce from an extreme zone and not consider the short on a
retracement to a declining trendline in a bear market. The 50-day EMA for the
Dow is 8179.
In addition to the short
covering in most of the junk stocks in the NDX 100, there has been significant
money put to work by the Generals. The sectors I believe that have to lead all
made a good start. The semis have seen the
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PowerRating)s advance +29% in four days.
The +32% rally in August was for 13 days. The BKX has advanced +20.4%. The XBD
has gained +24% and is now right at its 89-day EMA which puts you on alert to
play any intraday short setups. The initial entry on the XBD was from a double
Kings & Queens pattern on the daily chart, which you don’t see often, and it
was also an RST entry. The CYC is +17%, while the RLX gained +19% and is also
bumping up against its 89-day EMA, so be alert for short setups intraday in that
sector.Â
We start today with
short-term extended percentage moves for the major indices/sectors, in addition
to option expiration Friday, which is also a minor cycle date followed by a
major cycle date on Monday. If you utilize cycles as awareness points, you
should understand it includes +/- a few days around the dates. The primary thing
to look for around the date is an entry pattern with a trigger. And FYI: It’s
not always a reversal pattern. Frame your alert levels on the downside today for
the SPX, which are 838, 825 and 812. The 20-day EMA is now 836. Do the same for
everything else you trade.
I’ve got no comment on
the earnings plus or minus because the hype is so ridiculous in the media, with
no depth, that you just want to continue to play the overreactions either way.
Have a good trading day.
Five-minute chart of
Tuesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Tuesday’s NYSE TICKS