This Is Not Money Managers’ Favorite Theme
Kevin Haggerty is
the former head of trading for Fidelity Capital Markets. His column is intended
for more advanced traders. If you would like to learn how Kevin trades,
you can find more information here.
The major indices were all green yesterday as the
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was +0.7% to 1244.12, a new closing high, with range
expanding to 9.3 points. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was +0.6% to 10,684 and continues
in a 1.4% range since 07/14 between 10,718 – 10,573. The
(
DIA |
Quote |
Chart |
News |
PowerRating) range is
107.16 – 105.64. Led by the semis, the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) was +1.1% to 40.08, and the
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed at 2218, +1.0%.
The semis led the primary sectors with the
(
SMH |
Quote |
Chart |
News |
PowerRating) +2.8% to 38.28 with the .618 retracement to the 45.67 bull cycle high
on 01/08/04 at 38.92. It is also at the nine-month +2.0 standard deviation level
with the +3.0 band at 40. The SMH is +28% from the 29.87 04/15/05 low. Energy
had another strong day with the
(
OIH |
Quote |
Chart |
News |
PowerRating) +2.3% as crude oil closed at 61.89,
+0.5%, which is a new closing high after the Generals’ Pullback when the OIH hit
an 84.16 low at a rising long-term EMA on 05/16/05. The OIH closed at 117.08,
+39% since that Generals’ Pullback position trade setup.
NYSE volume expanded to 1.52 billion shares with
a volume ratio of 70 and breadth +1122. The 4 MA of the volume ratio is now 59
and 4 MA of breadth +600. There is a negative divergence in the SPX 5 RSI since
the 07/15 80.9 to yesterday’s 68.2. The XLB was +1.5% yesterday, led by
(
AA |
Quote |
Chart |
News |
PowerRating),
+3.1%, and
(
PX |
Quote |
Chart |
News |
PowerRating), +2.1%, and is now pushing the high end of its 29.10 – 26.70
(Double Bottom) range since 04/14/05. It closed at 28.93 with a 29.06 intraday
high (see chart). The initial retracement levels above the range are 29.35, then
30. Some of the basic materials stocks, like AA,
(
DD |
Quote |
Chart |
News |
PowerRating) and
(
IP |
Quote |
Chart |
News |
PowerRating) remain
"Below the Line."
The
(
TLT |
Quote |
Chart |
News |
PowerRating) remains under some selling
pressure, closing at 92.12, -0.3%, with a 91.96 intraday low (see "China
Revaluation", 08/02 commentary). The US Dollar was -0.1% to 88.74, while gold
was +0.7%. Rising crude oil and gold prices with a declining US Dollar and
rising bond yields is not the scenario money managers look favorably on if this
trend gains any momentum. As of 7:30 a.m. ET this morning, I see that crude is
trading up to 62.34 and gold +1.6 points to 439.30 while the equity futures are
small red with the Dow -9, S&Ps -1 and Nasdaq -2. That will obviously change
prior to the open.
Have a good trading day,
Kevin Haggerty
P.S. I will be referring to charts from
www.thechartstore.com in the future.
