Continue to emphasize these reversal strategies
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head of trading for Fidelity Capital Markets for seven years. Would you like
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In
Monday’s commentary it was said that the semiconductors and various
technology stocks are short-term oversold, with the 5 RSI <25 and the
same was true for the gold, copper and energy stocks going into this week. These
groups were leaders in yesterday’s advance. The SPX was +1.04% to 1297.48, which
is a new closing bull-cycle high. The Dow was +0.7% to 11,151, while the QQQQ
was +1.7%, powered by the oversold semis (SMH 1.73%) and various other oversold
tech stocks. In the commodity stocks, the OIH was +2.4%, XLE +1.9% and XAU,
+2.0%. March 6 – 8 was the key time period and the 1268.42 low was on 3/8
where this advance kicked off from, following the 03/03 1297.53 intraday high
and 1287.23 weekly close.
NYSE volume was only 1.54 billion shares
yesterday, which was low relative to the price advance. However, it was
obviously all one-sided, with a volume ratio 81 and breadth +1558. I don’t
attempt to read too much into the internals with three days left to a Triple
Witch expiration. The TLT, which had declined from 91 to 88 in eight days,
was +0.7%, so that got the media all hyped up–but as usual, for all the wrong
reasons. It has been tough for money managers to make money the last four months
because the SPX has been locked in a 3.7% trading range, and most of them don’t
buy weakness and sell strength, so they are lost without an obvious no-brainer
trending market. The winners have been the hedge funds that have taken advantage
of the volatility, especially in the commodity related stocks.
In the semis, the SMH has some significant
short-term resistance, so they will be one of the primary keys to any further
SPX advance. Both the OIH and XLE are at down trend channel lines, so it remains
to be seen whether the downside move is over or whether they will continue and
hit their 200 DEMA levels.
Reversals strategies like Trap Doors, RSTs, 1,2,3s and some Generals’ Pullbacks
continue to be the primary money makers for traders.
Have a good trading day,
Kevin Haggerty