You Get Paid When You Take It, Not When You Analyze It
It was
like old times yesterday, as
if the Turk showed up at 3:00 p.m. ET to let us know that he is still alive and
well. It doesn’t matter the reason because traders just need a move, and it is
especially good when you have prepared and are ready to react when the sequence
is in your favor. It was a 1,2,3 lower bottom for the SPX
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PowerRating), Dow
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PowerRating) and the
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PowerRating)s, while you had a 1,2,3 higher bottom for the
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PowerRating)s. Take your pick. The key point is that all were from significant
levels that you were prepared for in advance which made it a high-probability
zone.
The
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PowerRating)s traded
trend down to an intraday low of 81 by 2:00 p.m. vs. the .786 retracement to the
October low of 81.13. The 1,2,3 lower bottom entry was a reverse of the 81.06
low on the 1:00 p.m. five-minute bar. The trade carried up to an 82.66 intraday
high where it stopped dead at the 260 EMA and backed off to 81.90 before closing
at 82.38. The 1,2,3 trend entry was above 81.39. I have included the SPY chart
in today’s commentary for your records.
Those of you that have
the
1,2,3 module certainly recognize it. I was happy to get so many e-mails from
those that took or recognized the setup at the .786 level. For the SPX, the .786
zone is 808, and the intraday low yesterday was 806.29. The rally carried to
821.25, right at the 260 EMA and closed at 817.37, -0.2% in spite of the rally.
If you trade the futures, the initial entry was when the 807.15 low was
reversed, and the 1,2,3 trend entry was when the SPX traded above 809.66. The
Dow had the same pattern, rallying right to its 260 EMA of 7780 where it
immediately backed off to 7734, then closed at 7750. The QQQs hit an intraday
low of 23.32, right on its .618 retracement to the October low of 23.31 before
reversing on the 1,2,3 lower bottom. It carried up to 23.98, closing at 23.94.
The volume on the SPYs
increased to 58 million from 36 million on Wednesday. The QQQ volume was 78
million, up from 52 million the previous day, so obviously there were more
players in the game.
Yesterday’s afternoon
delight in the major indices puts the SPX back up to the 823 .707 retracement
zone and 827, which is the .50 retracement to the 1982 low. Newmont Mining
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PowerRating) gave me a good trade-through entry above Wednesday’s closing range of
27.57 – 27.19, and it carried up to a 28.44 close, so it was kept in position as
a weekend hedge to anything happening in the world. See
yesterday’s commentary.
Overall NYSE volume was
1.45 billion, a volume ratio of 35, and breadth -498. This certainly reflects
the fact that it was just a last-hour surge initiated in the futures market. You
don’t get paid by analyzing it, only when you take the move.
Have a good trading day.
Have a good and safe weekend and a Happy Valentine’s Day.
Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Thursday’s NYSE TICKS