Beach Ball Week Continues
Short-term overbought took precedence yesterday
rather than my view there would be little
downside pressure until after the holiday, but the week and the month-end are
not over yet, so hold your verdict, please. The 34 days into the rally is
stirring it up. The 923 – 925 slot jumped out at us yesterday as the first
attempt at the contra rally came from 924.91, which failed at 929, and the next
rally attempt from the 918 level failed at 924.54, and then it was south into
the 913 close. It is not unusual that things happen around the numbers or pi,
which rules time, i.e., 923 is the ’98 bear market low, 924 is the .50
retracement to the 1990 bear market low, 925 is the .38 retracement to the Jan.
7, 2002, 1177 high, and 923 is also the .786 retracement to the 965 August high.
Time was in play
yesterday as the 1.618 time target on a calendar basis is Nov. 27, measured from
the July 24 bottom to the Oct. 10 bottom, and yesterday was the 34th day of the
rally if you include the Oct. 10 bottom day. So, it is not unusual we will get
activity in this time zone. The trading month ends Friday, so it should be no
surprise if the Generals protect some of the rally’s gains today and Friday, as
the market trading will be very thin.
Yesterday’s NYSE volume
was 1.5 billion, volume ratio of 20, after the three-day short-term overbought
average of 72, and breadth was -874. In the sectors, the BTK was off -5.1%, the
SOX -4.4%, the XBD -3.5%, and the BKX -2.7%. Retail and cyclicals did better
than the major indices.
So far there have been
four days of churning at the head-and-shoulder 930 – 935 neckline from the 965
top. In the NDX 100, only seven stocks finished green yesterday as the junk
stock frenzy took a day off, but many of them will drop like rocks as this
current rally pulls back.
You have to laugh at the
dueling analysts’ battle going on in Intel, as a bull came out yesterday
following Merrill Lynch’s sell recommendation at 18 and change last week. I
follow and trade Intel daily, so just for the drill, I save all the news and
analysts’ comments on the stock. It is simply amazing how useless the analysts
are, in addition to the media’s hype both ways after any piece of news. Price
rules for the trader. Forget everything else.
I see the early futures
are green, and many of the techs are ticking up pre-opening. The beach ball week
continues.
Have a good trading day
and have a wonderful holiday.
Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Monday’s NYSE TICKS