Energy stocks and semis are trader’s focus today
GOOG was the
excuse and SPX 1280.66, -1.0%, was the
month-end closing result. The Dow was -0.9% to 10,993 and QQQQ -1.5% to 41.10.
Gold, drugs, biotechs, brokers, cyclicals and retail were all red anywhere from
-1.7% (XAU, PPH) to -1.0% (CYC, RTH). NYSE volume was 1.75 billion shares, with
down volume 1.43 billion shares, the same as the total volume on Monday. Suffice
to say the volume ratio was just 17 and breadth -1280. The OIH was -2.0% at one
point during the day but rallied to close flat, so that should be a trader’s
focus today. All other sectors/groups were red, with the SMH the best of the red
at -0.6%. Sell programs were the main culprit in yesterday’s SPX knife down, not
the Generals saying “sell everything” because a commodity stock like Google says
it might have trouble maintaining its growth. The stock’s been given a dot com
valuation–why wouldn’t you expect a sell off in a commodity stock like that
sooner or later?
The 01/11/06 1294.90 SPX high remains on a
closing basis in spite of the 1297.57 intraday high on Monday. The long-term
intraday trend is negative by my criteria until the SPX trades and holds above
1285.59, which is the current 34 DEMA on the 120-minute chart. The 5 RSI closed
at 20.28, so a reflex up this morning will occur. The same level for the $INDU
is 11,060 starting today vs. the 10,993 close. Initial resistance is 11,050 –
11,060. The initial downside zone for a quick bounce is 10, 950 – 10,900, which
is the key retracement zone for the 02/07/06 10,734 low. The Dow will lead any
bear cycle down because the energy stocks will prop up the SPX at times during
the “still more to come” Middle East/terror situation (see
02/27/06 commentary).
Have a good trading day,
Kevin Haggerty
