Odds Never Favor Buying Extended Zones
What Wednesday’s Action Tells
You
There was a discount opening in the major
indices
as the empty media suits jumped all over an unsubstantiated Iran rumor. The
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) hit a 1205.06 intraday low on the 10:00 a.m. ET bar, then
went
sideways with a 1208.96 high until Greenspan. That sent the SPX up to
1212.44 by
the 3:00 p.m. bar and closing at 1210.34, virtually unchanged. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) finished at 10,835, down less than 3 points, the
(
QQQQ |
Quote |
Chart |
News |
PowerRating)
at
37.98, -0.4%, and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -2 points to 2087.
It was simply a flat-line day and not trader
friendly in the major indices. NYSE volume was 1.44 billion shares, with the
volume ratio 49 and breadth just +54. The index proxy volume was also very
light, especially the QQQQ on 80 million shares vs. 105 million
average.
In the sectors, it was all energy again, as
the
(
OIH |
Quote |
Chart |
News |
PowerRating) was +2.8% riding the afternoon advance in crude. The XLB, which
has
been very strong since the 01/24 low, was +1.3% to new highs in this rally.
The
US Dollar gained as the
(
TLT |
Quote |
Chart |
News |
PowerRating) declined -0.4%. The TLT has been
overbought,
but probably for unusual reasons other than the economy, which seems to be
doing
okay. The
(
SMH |
Quote |
Chart |
News |
PowerRating) led the red sectors at -1.0%, closing at 33.76, right in
that longer-term moving average zone. The financials were also red, with the
XLF
-0.7% and was the worst-performing sector SPDR as might be expected. The XLB
and
SMH are into extended zones on a three-month basis as the XLB (basic
materials)
is +8.0% since the 01/24 low vs. +4.0% for the SPY. The SMH is +16.4% from
that
same 01/24 low in just 17 trading days, so that kind of momentum can’t be
sustained (see charts).
Have a good trading day,
Kevin Haggerty
