Jobs Circus–Watch For Any Overreactions
What Thursday’s Action Tells
You
At the close, the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was
just
+0.39 to 1210.47, but that does not tell the intraday story. It was another
expanding volatility day, and volatility reverted to the mean on the close.
In
fact, for the past four weeks, all of the weekly closes on the SPX have been
between 1211.37 and 1203.03, and this week is more of the same. The weekly
internals are also right on neutral, with the 4 MA of the volume ratio at 49
and
the breadth 4 MA at +49 (sounds like a number that should be played). NYSE
volume yesterday was 1.62 billion, the volume ratio 48 and breadth +215. The
Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) finished at 10,833, +0.2%, and the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) 37.30, -0.8%.
The
(
OIH |
Quote |
Chart |
News |
PowerRating) led the sectors again at +2.2%, while the semis declined for the
second day with the
(
SMH |
Quote |
Chart |
News |
PowerRating) -1.1%, unable, as of yet, to break above the
34.95
double top and inverted head and shoulders.
All of this means that the market enters this
time zone, +/- two days, around 03/08 in neither a short-term overbought or
oversold condition. Any breakout of the SPX range to the upside will take
the
index to extended levels and the 1220 – 1235 zone. To play the impending
move
away from this five-week dead center type of range, straddles were bought to
be
adjusted in the direction of the move. Inner Circle members reviewed this
strategy last week, so you understand the adjustment procedure.
Yesterday was excellent for S&P traders
once
again, as the expanding volatility (travel range) gave you both an RST sell
with
entry on the 10:15 a.m. ET bar that ran +10.6 points from entry to the
1204.45
low, which became an RST buy setup after taking out the 1206.62 low. This
RST
ran +6.3 points to 1212.47, closing at 1210.47.
Remember the
Generals’ Pullback setups to the
200-day EMA in the defense stocks with the significant volume increase on
01/05
and after?
(
LMT |
Quote |
Chart |
News |
PowerRating) and
(
BA |
Quote |
Chart |
News |
PowerRating) are both +15% since then. Net net, price
and
volume will almost always precede news. When the media and brokers are
counting
new company developments, it is long after the informed Generals have done
their
thing. They pay the commissions, they’re entitled to get the
info.
Today is the first-Friday-of-the-month jobs
circus at 8:30 a.m., so we will be waiting which side the
Trap Door sets up
on
if the amateurs overreact.
Regarding the recent commentary on
longer-term
bottoms being easier to recognize than tops, I have included a simple chart
from
www.thechartstore.com which
identifies the extreme selloffs into the October 2002 bottom (click
here for charts). Each one of
those
extreme conditions also had considerable sequence confluence which made them
key
price and time zones for a reversal of some sort and unknown duration. The
site
is excellent for most any kind of financial and economic data, including
some
very helpful special studies and observations.
Have a good trading day, and have a great
weekend,
Kevin Haggerty
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