The Game Is On At The Stock Casino

was 1146.18 and is +3.6% to yesterday’s 1187.90 intraday high before closing at

1185.56, +1.0% on the day. The Generals look to have the shorts on the run. The

SPX started this week with a 4 MA of the volume ratio of 31 and 4 MA of breadth

-825, which was short-term oversold. As of the close yesterday, the 4 MA of the

yesterday, with 1.44 billion shares of up volume and a volume ratio of 82. The

breadth was the strongest of the three-day squeeze at +1816. The Dow

(
$INDU |
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PowerRating) was +1.3% to 10,464, the Nasdaq
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$COMPQ |
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PowerRating) +1.3% to 2031 and

the
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PowerRating) +1.4% to 37.20. In the sectors, the XBD and CYC were both +2.5%,

followed by the RTH +2.1%. The XLE, which advanced +5.4% low-to-high in three

days, closed at 39.24, -0.2%. (Nice trade, sequence traders.) There was also a

big increase in sector volume. The XLB (+2.5%) traded +95% above its average

volume, the XLF (+1.2%) 100%, the XLK (+1.4%) +83% and the XLI (+1.5%) traded

200% above its average volume. This Friday is an option expiration, so that

probably played a good part yesterday, in addition to the Generals and short

had closed right at its 12-month SMA the previous day and our anticipation was

for the shorts to scramble, in addition to maybe a seasonal tech move. The QQQQ

traded to 36.88 on the second bar, then declined to 36.71 (12-month SMA) on the

9:45 a.m. ET bar. From there, a First Consolidation Breakout pattern formed with

entry above 36.88. The intraday high was 37.36, closing at 37.20 and above all

1187.90 high and an 1185.56 brings the .618 retracement level into play

(1193.60). The same level for the QQQQ is 38.26, Nasdaq 2077 and the DIA, which

closed at 104.84, has the .50 retracement at 104.86 and .618 retracement at 106.

The
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PowerRating), which traded to 119.08 yesterday, closing at 118.79, has a strong

Fib sequence from 119 – 120.11, which includes the 119.54 .618 retracement to

123.25. This corner’s longer-term index proxy allocation will be reduced some

more into this zone, and also some money will be taken off the table, replacing

index proxies with calls which keep you in the “Game,” but define your downside

risk. Some out-of-the-money (Dec. ’05) calls will also be sold against the long

Thursday, so I know not what the futures bring us. However, if the indices open

strong on Thursday, no long intraday trades will be taken, but Trap Door reversals

for the quick contra move down. On any early weakness, the SPY has a gap between

118 – 117.70 with the 118.08 swing point high (05/09/05) being the #2 point of a