Get The Current Perception–Watch The Sector SPDRs
The SPX was up +1.8
points on the opening bar, then it went trend-down below the 1161,
200-day EMA with a low of 1160.05 on the 11:10 AM bar. This set up an RST long
entry on a re-cross of 1161 on the 11:25 AM bar. The SPX only got to 1162.84 on
the 12:05 PM bar, which was the Washington/Cessna fiasco and the SPX hit the
1157.71 intraday low. The SPY traded 6.6 million shares on the 12:05 PM bar,
followed by 8.7 million shares on the 12:10 PM reversal bar when the Washington
flop was over. It was trend-up from there to 1171.77, closing at 1171.09, +0.4%
on the day. If you are a trader who likes to play those emotional overreactions,
you also took the next re-cross entry or else the continuation move above
1162.84 on the 1:00 PM bar. I wouldn’t be surprised if the “plunge protection
team” wasn’t part of that initiated rally. Net net, the SPX only sold off 2.3
points below the real-world market action low of 1160.05
NYSE volume was below 1.4 billion shares by 4:00
PM and after the run off, finished at 1.42 billion. The volume ratio was 60 and
breadth +354. In addition to the +0.4% SPX, the Dow was +0.2% to 10,300, Nasdaq,
+0.5% to 1972 as was the QQQQ to 35.95. All of the primary sectors finished
green, mostly in-line with the SPX. The initial market action (pre-Cessna) was
continued weakness from Tuesday and we will soon find out the nature of the
post-Cessna rally because it looked like it got some extra-curricular initiation
from other than the Generals.
The short side bias into this key time period
remains the same, especially with any up-move near or to the .50 – .618
retracement zones I have outlined in previous charts.
The XLB (basic materials SPDR) closed at 28.32,
right at the 28.45 – 28.10, 200/233-day EMA zones and the same for component
stocks like DOW, ROH and DD. If the Generals care, there can be some activity in
this zone today. Energy, healthcare and some medical equipment stocks continue
to provide good intraday long opportunities–especially stocks like UNH, HCA and
DGX–in addition to most all of the energy stocks. By just watching the sector
SPDRs you get the current perception very clearly. Right now, the XLU
(utilities), XLV (healthcare), XLP (consumer staples), and XLI (industrials) are
trading above their longer-term moving averages, while the XLB (basic
materials), XLY (consumer discretionary), XLK (technology) and XLF (financial)
are below.
Defense is above and offense is below, so it is a
good way to search for both long and short situations, especially on
retracements to rising or declining longer-term moving averages.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.
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