This Was The Key Trade Yesterday
What Thursday’s Action Tells
You
It was a decent day for traders in the major
indices, but it was a nothing day for reality. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and
Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) were +0.2% and +0.4% to 1209.25 and 10,852. The
(
QQQQ |
Quote |
Chart |
News |
PowerRating)
continues to be ugly at -0.1% to 37.52, while the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was
off
a point. The SPX and Dow did better than the internals as the volume ratio
was
49 and breadth -555. NYSE volume was 1.6 billion shares, so the market
action
didn’t exude any confidence. I mean, at one point yesterday, the empty suits
on
television were talking about 1970s-type inflation and anything else they
could
muster up to stir their viewers. Of course, CNBC is now talking about the
benefits of the XLE with oil at $55. Give me a break. They didn’t even know
what
it was when it counted. In the sectors, the
(
SMH |
Quote |
Chart |
News |
PowerRating) was +1.1% in front of
(
INTC |
Quote |
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News |
PowerRating)‘s forecast. I see that INTC was +1.73% after-hours to 25.28, but
we
have seen that game many times before, so let’s see “what up”
today. It is what
the Generals do going forward because cash buys stocks, not forecasters.
The key
(
SPY |
Quote |
Chart |
News |
PowerRating) trade yesterday was the
RST
buy
above 120.62 that traded to 121.50 before reversing to close at 121.24. That
trade set up after taking out the 03/03 120.70 low. If you utilize my
material
and did your homework, you caught the trade. Also, if you trade the ESH5,
the
same RST developed when the 1204.50 03/03 low was taken out. The ESH5 RST
long
entry was above 1203 on the five-minute chart which traded to 1211.75 with
nothing resembling a stop. The RST sell entry below 1210.75 traded to
1206.50,
closing at 1209.50.
The SPX is back into that multiple 1212.50
top
range, so that is now the immediate overhead minor resistance. Both the SPX
and
Dow have retraced three days to their 20-day EMAs and closed above them
yesterday. The better level for a trader’s reflex is the SPY 119.80 – 120
level.
Yesterday’s low was 120.40, but closed at 121.24 with a 121.50 high. The SMH
also bounced off the 33.74 20-day EMA in the low end of its 10-day trading
range, closing at 34.45. 34.95 is the immediate range resistance. The QQQQ
still
falls into the category of “Who cares?” unless it trades below 37
or else breaks
out above 38.
The Gold/Crude Oil relationship continues to
be a
good read for trades in those sectors. Gold is cheap at <10x crude, and
right
now is 8.1 with gold closing at 442.08 and crude 54.26. The other key is
that a
weaker US Dollar can set off a rise in crude’s price because it is priced in
dollars which makes it cheaper for other countries.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.
