Semis Are Initial 2005 Trader’s Focus
What Tuesday’s Action Tells
You
NYSE volume failed to break one billion
shares
again at 984 million shares yesterday, but the volume ratio was excellent
at 81
as the Generals held price, pushing the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) to a 1213.54
close,
+0.7%, as was the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) to 10,855. Breadth was very positive at
+1594. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was +1.1% to 2177 and the
(
QQQQ |
Quote |
Chart |
News |
PowerRating)
+1.0% to
39.97.
All of the primary sectors were green, in
line
with the SPX. Major institutional holdings with big gains in this bull cycle
continue to be marked up into year-end like
(
MO |
Quote |
Chart |
News |
PowerRating) +1.2%,
(
CAT |
Quote |
Chart |
News |
PowerRating) +2.5%,
(
UNH |
Quote |
Chart |
News |
PowerRating) +1.5% and
(
EBAY |
Quote |
Chart |
News |
PowerRating) +2.9%.
The best trading opportunities for daytraders
yesterday in individual stocks remained in the major institutional holdings
and
focus list stocks that have had strong year-to-date gains which will benefit
money managers the most at year-end. On the S&P 500 screen (commentary
page),
from yesterday’s action you see that the homebuilders led the percentage
advance
on light volume with
(
CTX |
Quote |
Chart |
News |
PowerRating) +3.9%,
(
PHM |
Quote |
Chart |
News |
PowerRating) +3.3% and
(
KBH |
Quote |
Chart |
News |
PowerRating) +2.8%.
All
three together advanced on less than 75% of their average volume. Nice job,
money managers, because all three stocks provided daytraders with Slim Jims
yesterday (five-minute charts).
The
(
BBH |
Quote |
Chart |
News |
PowerRating) was +1.8% yesterday, led by
(
CHIR |
Quote |
Chart |
News |
PowerRating) +2.4% and
(
GENZ |
Quote |
Chart |
News |
PowerRating) +2.3% on 90% and 76% of their average
volumes.
The primary component of the BBH,
(
AMGN |
Quote |
Chart |
News |
PowerRating), was +1.6% on 74% of its
average
volume. All three stocks provided daytraders with profitable entries above
Monday’s closing ranges. AMGN and GENZ made new high rally closes and were
the
stocks of choice for daytraders because they are both Above the
Line.
The leading sector SPDRs this year have been
energy, industrials and basic materials, so it should be no surprise that
CAT,
+2.5%, and
(
DE |
Quote |
Chart |
News |
PowerRating), +2.2%, were in the top percentage of S&P 500 gainers
yesterday because they are major holdings of the Generals, so new highs
certainly help the fund at year-end. CAT and DE advanced on 71% and 51% of
their
average volume, so it was an easy task to move price.
The semis are at a significant price zone and
will provide some good trading opportunities in early 2005. The SOX made a
209
low in October 2002, advanced almost 168% to 561 in January 2004 (this
followed
a 259 retracement to the 209 low), and then declined 37% to a 351 low this
September. The rally off the 351 low was +29% to 454 vs. the .50 retracement
to
561 which is 456. There was a -8.8% retracement from 454 to 414, and
yesterday
the SOX closed at 426.75, which is right at the 40-week EMA of 426.46. This
is a
key two-way line for traders, and that is how this corner will play it.
Catching
a semi move blows away any nickel-and-dime short-term moves in the SPX and
Dow,
so make sure you’re in the game with the
(
SMH |
Quote |
Chart |
News |
PowerRating)s.
This level is also an option trader’s delight
for
several different strategies which would be adjusted in the direction of the
next move, which will be soon.
Have a good trading day. Tomorrow will be the
last commentary until Monday, the New Year.
Kevin Haggerty
