This Sector Was Daytrader’s Gold Yesterday

price continuation in all of the major indices and primary sectors. The SPX

(
$SPX.X |
Quote |
Chart |
News |
PowerRating) went out at 1219.44, +0.6%, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) +0.7% to

10,520,
(
QQQQ |
Quote |
Chart |
News |
PowerRating) +0.9% at 38.12 and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) 2135, +1.1%.

The
(
SPY |
Quote |
Chart |
News |
PowerRating) volume was less than average, the
(
DIA |
Quote |
Chart |
News |
PowerRating) volume in line and the

QQQQ volume was 96.2 million vs. the 84.4 current average. NYSE volume was 1.4

billion shares, the volume ratio 77 and breadth +1416. The 4 MA of the volume

ratio is now 60 and breadth +755. The significant market action in the primary

sectors yesterday was the semiconductors with the
(
SMH |
Quote |
Chart |
News |
PowerRating) +2.5%, closing at

36.40. Volume was just above average. That is a +8.0% gain for the SMH in six

straight up days, and as outlined in many previous commentaries, for the SPX to

extend wave 5 of this bull cycle, the semis must be a leader, so the range

index proxies/futures. For example, the SPY had a First Consolidation Breakout

above 121.65 which traded to 122.06 before declining to 121.46. It depended what

your bias was as the SPY hit the 121.75 – 121.95 resistance zone (07/11

commentary). The short entry was below SPX 1219.02 which declined to 1214.69

before reversing back up to the 1219.44 close. The SPY short entry was below

sector as the
(
OIH |
Quote |
Chart |
News |
PowerRating) was +1.3%, but very tradable. There was a Trap Door long

entry above 103.11 which was also an RST entry with the pattern setting up back

to last Thursday. The OIH traded +2.4% from entry to 105.58, closing at 105.46.

(
SLB |
Quote |
Chart |
News |
PowerRating), one of our focus list stocks, had the same combination
Trap Door/RST

setup and advanced +2.6% from entry to 78.70, closing at 78.57. That is what I

call daytrader’s gold. The XLB (basic materials SPDR) was strong again at +1.4%,

initial contra moves back to the 20 EMA level (five-minute chart), like

(
KLAC |
Quote |
Chart |
News |
PowerRating) which provided daytrading entry above 46.02, advancing +1.2% to

47.16, then going sideways before the +.32 gain in the last 20 minutes of

trading to close at 47.32. KLAC is in both a larger and smaller contracted

volatility pattern. The initial upside resistance level is 48 – 48.50 and the

larger one is about 58 (see chart). If the semis follow through, KLAC will be a

07/15, and it is also the 34th month of this bull cycle (includes the 10/07/02

low month). The bear market time down for the Dow was also 34 months from the

January 2000 top, and it is 32 months for the SPX. Does that tell you something

about your current market risk and the need to protect the significant gains

that you have on paper, which really means bupkis unless you have a defined loss

downside strategy from current levels or you have banked gains. Think about it.