Get ‘Lucky’ — Take The Defined Strategy Trades
What Tuesday’s Action Tells
You
Last week’s positive divergence in market
action
with the major indices declining on the week, but with the five-day average
up
volume to down volume ratio going to a positive 1.04 ratio, 740 million up
to
710 million down, carried over yesterday as the major indices had a trend up
day. The breadth ratio also went positive last week at 1.2. The ratios in
the
first week of January were 0.45 and 0.36, along with the declining price in
the
major indices, so there was no doubt about that market action.
NYSE volume expanded to 1.6 billion shares
from
Friday’s 1.34 billion. The volume ratio was a very positive 76, following a
similar 72 on Friday. Breadth was also good at +1223 which followed a +1168
on
Friday. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) finished the day at 1195.98, +1.0%, which
was
almost a +2.0 volatility band move on the day and is a strong intraday
trend.
The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was +71 points (+0.7%) to 10,629, Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
+0.9% to 2106, and the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) +0.8% to 38.72.
The sector market action was led by the
financials with the XBD +1.8%, BKX +1.7%, followed by retail with the RTH
+1.3%.
Disappointing, in my opinion, was the +0.5% gain in the
(
SMH |
Quote |
Chart |
News |
PowerRating). The
mutual
fund touts and analysts can try to spin a further advance in the major
indices
without the semiconductors, and if you believe that, I have a cheap Brooklyn
Bridge you can buy also. Unless there is something new to replace Chips, the
major indices need the semiconductors to mount any kind of move past SPX
1220 –
1260.
Yesterday’s closing prices saw the QQQQ,
38.72,
close right at the 50-day EMA, with the 20-day EMA at 38.92. The
(
DIA |
Quote |
Chart |
News |
PowerRating),
106.16, was at the 106.20 20-day EMA, while the SPX, 1195.98, closed above
the
20-day EMA of 1191.80 and also above all of its 20-, 50-, 89- and 200-day
EMAs,
so that is a good thing. The
(
IWM |
Quote |
Chart |
News |
PowerRating), which showed the initial positive
oscillator divergence from the key time and price zone (01/12 commentary),
has
advanced +3.8% off its 89-day EMA, closing yesterday at 124.35 with the
20-day
EMA at 124.73.
The mid-January price and time zone gave you
the
1175.61 SPX low last week and the last (stronger) Jan. 17 time date gave us
the
initial lift yesterday. (Jan. 17 was the holiday.) The next time zone with
several dates is 02/17 – 02/22.
On a close-to-close basis, the SPX has
declined
only 3.0% on the move from the 1213.55 high close to Thursday’s 1177.45
close.
You would never know that by listening to the media. You would think it was
a
10% decline and the bear market was underway. If the major indices were to
reverse to the downside, 1170 – 1165 is a strong price zone.
Traders of the S&P futures/
(
SPY |
Quote |
Chart |
News |
PowerRating) had
a
defined long entry yesterday as the SPX made an 1180.10 intraday low, then
re-crossed the 50-day EMA of 1181.35 and three-month EMA of 1182.12. The SPX
ran
to an 1195.98 close. You can’t get lucky with an intraday trend move unless
you
take the
defined strategy trades.
It remains a media earnings circus, so the
expected volatility should continue for a while, and that means continued
daytrading opportunities.
Have a good trading day,
Kevin Haggerty