Let The Long-Term Equity Holders Be Nimble

The major indices were small to the downside as

the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was -0.1% to 1199.95 with an intraday range of only 5.4

points. After the opening-bar 1204.07 intraday high, the SPX formed a

contracting volatility triangle right at the 816 and 480 EMAs (see chart). When

price reversed below 1202.48 (1:15 p.m. ET bar), it only made an intraday low of

1198.70 in a two-step choppy move. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was -0.3% to 10,374,

NYSE volume was similar to Monday and Tuesday at 1.35 billion shares with the

volume ratio 53 and breadth +484. I guess all you can say is that it was a

holding action. In the sectors, it was gold green with the $HUI +4.5%, XAU +3.8%

major indices. The Transportation index ($TRAN) was +1.0%, while the XLI and XLY

were each -0.6% with the XLB -0.4%.

The Dow has been the weaker index as the basic

materials (XLB) and industrials (XLI) sold off and yesterday’s market action in

the
(
DIA |
Quote |
Chart |
News |
PowerRating) provided that short opportunity on the retracement to the 104

200-day EMA from Monday’s 102.44 low. The DIA hit 104.23 on the opening bar and

then formed a similar contracting volatility triangle with the breakout below

104 which traded to 103.57 and finally closing at 103.60 after some choppy

action from 2:00 p.m. to 4:15 p.m.

The GDP number was in line and produced no

reaction with the weekly unemployment claims today, along with the ISM

Manufacturing index for June on Friday. The US Dollar closed on the plus side to

89.16 and is currently in an ascending triangle at the current rally highs since

the low is just above 80.

Puts on the DIAs will be bought into any advance

the next two days and next week. Longer-term equity exposure has been reduced to

under 40%.

Have a good trading day and have a great holiday

weekend.

The next commentary will be next Wednesday.

Kevin Haggerty

P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.