Learn It And Profit
What Thursday’s Action Tells
You
The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at
1106.69, -0.4%,
and it was the fifth of the last six days with the low between 1106.69 –
1109.11. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was also -0.4%, while the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s and
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) were -0.1/% and -0.3%. NYSE volume was 1.41 billion in front
of
a quiet option expiration, with the volume ratio at 40 and breadth
+266.
The market action was choppy again as the
travel
range was up until 1:00 p.m. ET and then down into the close, similar to the
previous day, but not as volatile. For example, the QQQ gave you a 1,2,3
higher
bottom with entry above 35.20 which carried up to 35.50 and the 240 EMA
where it
reversed to 35.25 on the 3:45 p.m. bar, and then had a quick drop to a 35.07
close. This corner put on a few to carry over with the 12-month EMA just
below
at 34.94.
The SPY gave you the same 1,2,3 higher bottom
above 111.40 with entry on the 10:20 a.m. bar, but it only traded to 111.59
before reversing and stopping you out, and then forming the 1,2,3 double
bottom
at 111.13 with entry above 111.27. This second trade ran to 111.91 and the
480
EMA (20 EMA on the 120-minute chart), and then reversed to a 110.80 close.
The
air pocket from 3:45 p.m. – 4:00 p.m. was down from 111.30 as the program
lights
went on and volume expanded.
The
(
SMH |
Quote |
Chart |
News |
PowerRating)s ranged all day between 33.15 –
32.59 as the players backed off, and the SMH volume dropped below average to
15
million.
Energy had another big day, so did those of
you
working with my focus stocks. The
(
OIH |
Quote |
Chart |
News |
PowerRating) followed the +2.2% day on
Wednesday
with a +2.7% day yesterday and good trade-through entries on the focus
stocks.
For example,
(
SII |
Quote |
Chart |
News |
PowerRating) was +3.3%,
(
DO |
Quote |
Chart |
News |
PowerRating) +3.3%,
(
NE |
Quote |
Chart |
News |
PowerRating) +2.9%,
(
WFT |
Quote |
Chart |
News |
PowerRating)
+2.4%,
(
SLB |
Quote |
Chart |
News |
PowerRating) +2.0%,
(
CAM |
Quote |
Chart |
News |
PowerRating) +2.2%, and
(
RDC |
Quote |
Chart |
News |
PowerRating) +3.4%. There were all
“above the
line” stocks (explained in “Stock Selection” section of
seminar material) that
had retraced to and/or consolidated at their rising 20-day EMAs, and that is
why
they were focus stocks on the retracements.
For Active
Traders
I have included some charts for your ongoing
learning process that you should save for further reference. If I can’t help
you
make money, then I have no interest in doing this rag sheet anymore. The
first
chart is the QQQ trades on Wednesday, and as you observed yesterday, at
35.50
1,2,3 trend entry short level was resistance yesterday in confluence with
the
240 EMA.
There are three SII charts. The daily chart
shows
you the retracement setup at the rising 20-day EMA zone after making another
all-time high at 58.26. Next, there is the SII five-minute chart showing you the
second entry above the previous day’s high of 56.02 that ran 1.9 points
(+3.4%)
to 57.90 by 3:30 p.m. As you can see, the first entry ran to 56.65 as the
emotion carried over, but it then reversed to 55.80 shaking the tree, and then gave you the second entry above 56.02.
Most
traders choke and are reluctant to take the second entry. Yes, the initial
entry
could have kept going, and you would have been shut out of a good trade, but
after a thrust day, the next day is very likely to reverse the previous high
at
some point, so it is just the risk factor you prefer, and new traders are
much
better off with second-entry trades on breakouts, which this is, above the
previous day’s high.
The other way to play it is to buy no more
than
50% of your position on the first breakout if you feel strongly about the
trade
and then quickly move to breakeven if you get some profit cushion. In this
case,
either way you made money.
The third SII chart is the monthly chart back
to
1995, and as those of you who attended the seminar know, they are extremely
important in any stock selection process. The longer the term, the higher
the
probability. As you can see, SII was in an ascending triangle from the 1997
high
with the breakout above the 44 – 45 level in January of this year. With
price
going higher and the 5 RSI diverging, it indicates a higher probability of a
pullback now, but that doesn’t stop you from taking the daytrade setups if
the
players are pushing price.
The last chart is DO with a similar
second-entry
opportunity, which by the way, was also an opening reversal above all of the
five-minute chart EMAs. These same exact strategies are outlined and
explained
in the
“Trading Generals IV” CD and 777-page trading
manual.
Today’s
Action
The SPY closed at 110.80 on that last
15-minute
program activity with the 200-day EMA just below at 109.86. The 5 – 5 -3.0
standard deviation band went out at 110.85. The QQQs closed at 35.07, just
above
the 12-month EMA of 34.94 with the 5 – 5 -2.0 band at 34.85. These are the
initial reference points on early weakness which can only happen after
whatever
“I” report there is today.
Have a good trading day, and have a great
weekend.
Kevin Haggerty
