Trap Doors Long And Short Yesterday
What Tuesday’s Action Tells
You
The major indices tread price yesterday, with
the
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) 1164.08, losing less than a point, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
10,387, -4 points, the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) 2043, +4 points, while the
(
QQQ |
Quote |
Chart |
News |
PowerRating) was -0.2% to 37.92.
NYSE volume was 1.45 billion shares with the
volume ratio 55 and breadth +545 vs. Monday’s -834, so that is a positive.
Both
the volume ratio and breadth were better than the closing index prices.
There was nothing to distinguish any of the
primary sectors, so there were no clues there for today’s trading. The
(
TLT |
Quote |
Chart |
News |
PowerRating)
was red for the third straight day adjusting to the lower US Dollar. In the
S&P
500 screen (on my commentary page), a few stocks stood out in both price and
volume after long declines this year. Both
(
WHR |
Quote |
Chart |
News |
PowerRating) and
(
MYG |
Quote |
Chart |
News |
PowerRating) have
broken
their down trendlines in the past few days, setting up potential 1,2,3
Higher
Bottoms on any initial retracements. There was a price-and-volume follow
through
for both
(
DE |
Quote |
Chart |
News |
PowerRating) and
(
DOW |
Quote |
Chart |
News |
PowerRating), so net net, there was a small green flavor
in
the basic industry stocks yesterday, which is a positive.
On the other hand, the
(
SMH |
Quote |
Chart |
News |
PowerRating), which was
-0.5%, has traded some of its lightest volume of the year these past two
days.
You probably won’t see the cyclicals get moving again without the chips
joining
in. The SMH, just like the QQQ, has had three narrow-range doji bar days in
succession. This contracting volatility will be broken quickly, so traders
will
benefit.
For Active
Traders
It was an interesting morning yesterday, as
there
were some good
Trap Door setups. In fact, at the same time there was a Trap
Door
short in the SPY/futures at the 10:00 a.m. ET bar, there were Trap Door long
setups in the OIH and some other energies, like
(
DO |
Quote |
Chart |
News |
PowerRating) and
(
BHI |
Quote |
Chart |
News |
PowerRating).
The SPY traded to 117.50 (10:00 a.m. bar),
which
was back up to the SPX 1169.50 – 1174 minor resistance and the previous
117.64
SPY high. This was an outside bar, and after entry, the SPY traded down to
116.76. This set up a 1,2,3 Higher Bottom with your maximum entry above
116.91,
and this longside reversal carried up to 117.44 before reversing again down
to
the 116.89 close. Love that travel range.
The OIH long Trap Doors, including DO and
BHI,
occurred at the same time as the SPY short. If you follow my strategies, you
observed that the OIH hit its 89-day EMA at the same time as the Trap Door
setup, so you had a reversal of the 89-day EMA with your long entry in the
Trap
Door. The OIH carried +2.0% from entry, as did DO and BHI, both +2.1% from
entry.
Today’s
Action
The futures are green at 8:20 a.m., with the
S&P
+3.60, Nasdaq +5.50 and the Dow +23. The SPX is in a narrow-range three-day
pattern between 1170.87 and 1160.36, so that will be resolved quickly, which
opens up the trading game again, although yesterday’s travel range in the
SPX
was good despite a close of less than -1 point.
In yesterday’s commentary, I outlined the
minor
resistance just above the SPX at 1169.50 – 1175 and below at 1150 – 1145, so
that remains the same.
Have a good trading day,
Kevin Haggerty
P.S. Trade with me for a year. Go to
www.kevinhaggerty.com for details.