Good Things Happen To Traders With The Correct Stock Selection Method
What Monday’s Action Tells
You
The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed back into the
previous three-day range at 1190.25, +0.3%. The intraday high of 1194.78
failed
to get past the declining 10- and 20-day EMAs at 1194.63 and 1195.43, so
there
is no short-term trend change until that happens. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
finished
+0.2% at 10,621, the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating), 2097, +0.4%, and the
(
QQQQ |
Quote |
Chart |
News |
PowerRating)
unchanged at 38.53.
NYSE volume was 1.49 billion, the volume
ratio 64
and breadth +854. Both a little better than the SPX/Dow price changes, but
the
trend down yesterday starting about 2:00 p.m. ET took the air out of the
internals. The up volume/down volume ratio had been running at about 3:1
most of
the day and breadth above +1000.
The only sector red was the
(
SMH |
Quote |
Chart |
News |
PowerRating)
at -0.2%
and has had only one plus day out of the past eight days, but has provided
some
excellent long intraday reversal trades similar to yesterday’s
Trap Door retracement (31.29) to the 31.12 Friday low which reversed up to a 31.82
intraday high before declining into the 31.42 close (see today’s
chart).
The
(
SPY |
Quote |
Chart |
News |
PowerRating)/futures did not offer a similar
setup, having traded down on the first bar to a 118.34 intraday low, then
straight up to a 119.22 – 119 range. There was a quick breakout to 119.46,
then
the afternoon trend down to 118.59, closing at 119.
The primary group price-and-volume thread
yesterday was in the homebuilders with stocks like
(
CTX |
Quote |
Chart |
News |
PowerRating),
(
PHM |
Quote |
Chart |
News |
PowerRating),
(
KBH |
Quote |
Chart |
News |
PowerRating) and
(
RYL |
Quote |
Chart |
News |
PowerRating) continuing to make new all-time highs and will
probably
make the best shorts, along with
(
GOOG |
Quote |
Chart |
News |
PowerRating) when the bull cycle reverses
down
in 2005.
Six of the top ten NDX 100 stocks yesterday
with
a minimum gain of 1.6% were from the
Inner Circle focus list, and in fact,
11 of
the top 20 were from the list. Good things happen to traders with the
correct
stock selection method instead of trading emotionally with whatever is up or
down the most on any specific day.
We start the day with the SPY 119 close,
which is
right on the 240 EMA (five-minute chart). If the SPX goes red, then the
first SPY RST setup is below 118.34 and then again below 118.13. The 50-day EMA is
118.16.
The primary RST for the SMH is below 31.12
with
initial rally resistance at the 240 EMA, now 31.64.
Have a good trading day,
Kevin Haggerty
