The Type Of Setups I’m Looking For After The Open
What Yesterday’s Market Action
Tells You
The major indices
trended up into the close, but not until after a quick down opening
where the futures declined about 10 points to a 977.50 low for the E-minis. That
set up another excellent trading day. NYSE volume was 1.68 billion, volume ratio
67, and breadth dropped off to +759 from +1689 the previous day. The SPX
(
$SPX.X |
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$INDU |
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flat, the Nasdaq
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$COMPQ |
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(
QQQ |
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(
SMH |
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were essentially flat also at -0.1%.
In the major sectors, the biotechs expanded on
Wednesday’s +2.7% gain to a +3.4% gain yesterday. The biotech stocks from our
Wednesday scrolling list all carried through yesterday, led by
(
ICOS |
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+17.5% from entry to high — hello —
(
MEDI |
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(
SEPR |
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(
GENZ |
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were
(
TARO |
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(
ESRX |
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those stocks, so it was just a question of whether the buyers would show up
again. Above-the-line stocks with average implied volatilities above 40 can be
very explosive.
The rally into the close that started at 2:30
p.m. ET for the SPX was on light volume for the
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SPY |
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picked up. The VIX closed at 22.48 on Wednesday and jumped +5.2% to 23.65 during
the first five minutes when the major indices opened down, so that gives you a
little idea of what will happen if we get a correction and volatility expands.
It closed at 23.12, closing above its 20-day EMA and above the last eight
closes. The VXN closed at 34.53 and made a 30-day new high close after trading
sideways since April.
For Active Traders
All of you Trap Door traders had a field day
judging from the e-mails I received. Congrats. It didn’t matter whether you
traded the SPY, the E-minis, DIAs, QQQs or SMHs, you all had the same basic
trade and entry on the 9:45 a.m. five-minute bar. If you were scrolling your
intraday charts on individual stocks, you should have found multiple
opportunities all day with first consolidation breakouts to new intraday highs
like
(
AMGN |
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(
MEDI |
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(
GENZ |
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Today’s Plan Of Attack
The early futures are heading north at 7:30 a.m.
with the S&Ps +6 points, Dow +50 points, and the Nasdaq +13. The first
Friday of the month with the much-revised non-farm payrolls and unemployment
numbers always creates a media flurry and enables the futures to be manipulated
pre-9:30 a.m. NY opening. After any Trap Door chances on a gap up opening, we
are looking for gap pullback setups if the Generals decide to take the market
back in the direction of the open. Continue to focus on the scrolling list from
the June 4 commentary, despite the two-day explosion by some of them. Add
(
GILD |
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(
YHOO |
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GILD, XLNX, QLGC, DOW and even LLTC so you’re ready to catch a ride if they run
it from its ranging pattern.
On the contra side, most of the oil service
stocks, like
(
RIG |
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CAM |
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DO |
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SII |
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WFT |
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consolidating patterns above the lines, so don’t miss the ride if it’s an energy
day today, or whenever.
Have a good trading day.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS