SPX Key Price Zone. You Know What To Look For
What Tuesday’s Action Tells
You
Yesterday’s market action was both erratic
and
disappointing as the earnings hype, both good and bad, starts to roll. This
is
generally good for daytraders and very difficult for position traders who do
not
utilize option strategies to define their risk.
On Friday, the volume ratio and breadth were
much
better than the +0.4% gains for the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating), Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
and
(
QQQ |
Quote |
Chart |
News |
PowerRating). This was followed by an up Monday with the SPX closing +0.5% to
1114.04. It was also true that on Monday the volume ratio at 55 and breadth
only
+306 did not support Monday’s SPX gain. This was followed yesterday by an
SPX
failure at the 1118 level, just below the 1120 200-day SMA, and then a trend
down day followed after a weak rally attempt in the direction of the
open.
Yesterday’s reversal down was significant in
that
NYSE volume expanded to 1.74 billion with 1.2 billion down and 486 billion
up
for a volume ratio of just 29. Breadth was -961. This again highlights the
concentration in big-cap stocks.
The SPX closed at 1103.22, -1.0%, the worst
of
the major indices, as the Dow, 9898, was -0.6% with the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
and QQQ, 35.88, both -0.7%.
It was a mixed bag in the sectors with the
(
SMH |
Quote |
Chart |
News |
PowerRating) +1.6%, after being over +3.0% during the day, and the XBD at
+1.0%. On
the red side were the banks, with the BKX -1.5% and CYC -1.2%.
^next^
For Active
Traders
The SPX did not make it past 1118 on the up
opening. It reversed after the 10:05 a.m. ET bar, trading down to the middle
of
the .50 – .618 retracement zone to Monday’s 1103.33 low. The reversal from
that
zone only advanced +2.5 points, then failed with the SPX then making a double
bottom
attempt from the 1109.30 level on the 1:05 p.m. bar, which only ran +1.5
points
before reversing and making new intraday lows down to the 1103.23 close. It
was
trend down from 1:45 p.m. – 4:00 p.m. as SPX programs accelerated the
action.
It was a very mixed tape prior to the
afternoon
air pocket, i.e., at 1:00 p.m., the SPX was -2.8 points with the Dow +14
points,
QQQ +0.4% and SMH +2.8%. Breadth was -125 and the up-volume-to-down-volume
ratio
was slightly negative at .75. TRIN had been in the 1.20 to 1.25 zone for the
previous two hours. These dynamics were not all bad after the morning
decline
from the 1118 SPX intraday high. However, programs then entered the game and
it
was an air pocket down.
Today’s
Action
The SPX is back to that 1100 – 1093 key price
zone having made intraday lows just above the 1100.95 200-day EMA the past
four
days. If the early futures remain red, then the 09/28 swing point 1101.29
low
will get taken out, which is a positive a few days before a key longer-term
time
date if there is to be a tradable rally.
The QQQ closed at 35.80 with the 200-day SMA
at
35.82 and the more significant zone down at 35 – 34.80.
If the current red futures hold, then
Trap
Door
setups in the QQQ and
(
SPY |
Quote |
Chart |
News |
PowerRating) — or futures — can be played on any decent
early price weakness.
Have a good trading day,
Kevin Haggerty
Spend the next year trading with me.Â
Click here for details.