Downside Reversal Bias In Place
The SPX has been locked
in a narrow range since noon on Friday, so there was no significant
market action yesterday for traders. The SPX was off 0.1% to 1164.89 and the
daily range just 4.5 points.
The divergence on Friday with a volume ratio of
65 but breadth only -5 resulted in a volume ratio of 44 yesterday and
breadth -834. After the nine straight up days the 4 MA volume ratio of 70 on
Friday and 4 MA of breadth at +959 was short-term overbought as the 1163.23
intraday previous rally high was breached to Friday’s 1170.87 high. This is the
first attempt at the fifth wave of this bullish cycle which started in October
2002.
NYSE volume dropped off to 1.36 billion shares
and there was no immediate air pocket down after taking out the 1163 magnet, so
that is a positive for the moment.
If there is no terror attack on American soil,
the Generals are in a position to make a fifth wave a reality with a price
objective to the 1225 – 1254 zone. 1254 is the .618 retracement to 1553 from 769
and breaking through and holding the 1161 50% retracement zone which has stopped
price the entire year so far makes that a real possibility for the Generals.
This would lock in a double-digit plus year for 2004.
Traders start today with the SPX closing range
Slim Jim from 1166 -1164, which prevailed from 2-4 PM yesterday
On the downside, there is minor support at 1157 –
1160, then the 480 EMA (5-minute chart) at 1150 and the 1145 high monthly close.
On the upside, there is minor resistance from 1170 to 1175.
Nothing has changed since yesterday and there is
no interest from this corner on chasing price into that 1170 -1175 zone.
The better long trades this week will be retracements to that 1145 – 1150 zone.
There is a mid-November time zone in play and
the move into this time zone has been a strong up, so a downside reversal bias
is in place ex any overt news.
Have a good trading day,
Kevin Haggerty
P.S. Trade with me for a year —
click here.
