If You Don’t Get Index Setups Today, Try This…
What Thursday’s Action Tells
You
The technology divergence carried over with
the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) finishing -0.9% and Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -0.8%. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1203.21, -0.2%, while the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was
+14
points due to the +4.3% gain in
(
MRK |
Quote |
Chart |
News |
PowerRating) and +4.2% by
(
JNJ |
Quote |
Chart |
News |
PowerRating) which is
buying
(
GDT |
Quote |
Chart |
News |
PowerRating). The Dow finished the day at 10,706.
NYSE volume expanded to 1.79 billion shares,
helped in kind by the merger volume and option-expiration-related activity.
The
volume ratio was 45, but was certainly deal skewed, while breadth was
negative
at -1021. As you would expect, the PPH led the sectors at +2.6% with the
deal
action. The
(
SMH |
Quote |
Chart |
News |
PowerRating) led the red team at -1.7%, closing at 32.78. The rest
of
the sectors were red from -0.3% to -0.9%. The
(
TLT |
Quote |
Chart |
News |
PowerRating)s got whacked
at -1.5%
with lots of agendas going on in that market. If the economy stays strong,
they
are going down regardless of any arbitrage, etc.
For Active
Traders
It was up for the
(
SPY |
Quote |
Chart |
News |
PowerRating) into the 12:00
p.m.
ET bar and the 121.24 intraday high. This set up a second RST entry below
121.04. (The first was stopped out at 121.15 after entry below 121.02.) This
second RST carried down to the 120.20 – 120.40 level of interest (12/16
commentary) with a 120.22 intraday low. This set up an RST buy above 120.39
which carried to 120.87, closing at 120.81. That is what you call a good
trading
day in the SPY.
Today’s
Action
The SPX closed in an outside bar (daily
chart) at
1203.21 with a low of 1198.41, so that is the first downside focus for
today,
depending on the opening. (This is being done Thursday night for
Friday.)Â
The SPX has traded six straight days of higher highs and entered yesterday
with
the 4 MA of the volume ratio at 63 and 4 MA of breadth at +909. This was an
anticipated time week, and instead of that retracement we’ve looked for, the
SPX
made an 1188 low on Monday and the week’s high so far of 1207.97 yesterday.
Because of this advance, a three- or four-day retracement will be shallow,
but
may be enough to let the Generals play the game into year-end. A +10% year
for
the Generals would be 1223.11 on the SPX, so if that’s the goal, they must
not
let the SPX get away too much on any short retracement.
The SPX has minor support at 1194.50, 1191
and
then 1184 and 1170. For the QQQQ, the first level of interest on the
downside is
39.60, and for the Nasdaq, it is 2120. The
(
DIA |
Quote |
Chart |
News |
PowerRating) has no trading level
interest unless it trades down to about 106.
Today is Triple Witch, so trading can be
erratic
at best. Part of that increased volume yesterday was option related. Stay
with
that major index/energy tandem because if you don’t get trade setups in the
indices, you usually will in the energy stocks.
We are now in the backstretch of 2004, as
next
week is a short one with the markets closed on Friday for Christmas Day. For
the
Generals, it is about selling losers and marking up winners, in addition to
repositioning for 2005. I am surprised that we haven’t heard too much hype
about
the years ending in “5” have the best historical returns, etc.,
but I am sure we
will shortly. Hopefully that will accelerate the Leg 5 of this bull cycle to
good profit-taking levels, while, of course, the hype remains
bullish.
Have a good trading day,
Kevin Haggerty