Today’s initial downside alert
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The SPX entered the March
6,7,8 time zone with a 1297.33 intraday high on Friday, declining in
the afternoon to the 1287.23 close. The first anticipated price zone was 1271 –
1270 and that was hit yesterday, with the 1271.16 – 1271.11 intraday double
bottoms. The -1.0 volatility band yesterday was 1270.60 and there was a valid
entry trade. The better index trade yesterday was the DIA RST buy setup. Gold,
energy and semis led the downside, with the XAU and OIH each -0.3% and the SMH
-1.9%. All three are short-term oversold. Some defensive issues finished green
with the XLP +0.7%.
The SPX has declined 4 days in succession, but only
-1.3%. The 7:30 a.m. S&P futures are -3.0 points and the Dow -21, so early
weakness can lead to an upside contra move in the first hour. The SPY intraday
low yesterday was 127.50, which is also the 50 DEMA and it closed at 127.97, so
you know where the initial downside alert is. Yesterday’s SPX low was also the
.618 retracement to the 02/07 1253.61 low, so there is ample zone symmetry. In
spite of the SPX 4-day advance, it is not quite in the ST-OS condition.
NYSE volume has remained constant and was 1.65
billion shares yesterday but the volume ratio was 28 and breadth -1530, which
follows Monday’s 33 and -1287. One more down day will put the 4 MAs and RSI (now
33.1) into the ST-OS. Remember, it takes plenty of cash to move the market up
but it doesn’t need an increase in volume to take it down when the Generals just
sit it out.
Have a good trading day,
Kevin Haggerty