Watch For Sudden Price Moves, But Don’t Chase
What Monday’s Action Tells
You
It wasn’t a trader-friendly day yesterday for the
major indices, as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) traded in a 4.5 point range all day
until the program pop in the last hour which carried the SPX to a 1069.20 close,
+0.7%. The low end of the range was 1061 and high end 1064.50, which is the
neckline from that 30-minute chart in yesterday’s commentary. The Generals were
obviously not very active, as NYSE of 1.19 billion was the lowest since Nov.
11 (not including the Wednesday before Thanksgiving). The quiet tape and narrow
range was a good time for that late program activity. If you check your
(
SPY |
Quote |
Chart |
News |
PowerRating)
five-minute chart from yesterday, you will see the volume spikes at 3:00 p.m.
ET, 3:30 p.m., then on the close at 4:00 p.m. and 4:10 p.m. Both the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) and
(
QQQ |
Quote |
Chart |
News |
PowerRating)s ended +0.6%, and the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) ended
+1.0% on a new high and close.
The price move in the major sectors was the
(
CYC |
Quote |
Chart |
News |
PowerRating)
+1.3%, BKX +1.3% and XBD +1.1%. The
(
SMH |
Quote |
Chart |
News |
PowerRating)s finished slightly red.
(
MSFT |
Quote |
Chart |
News |
PowerRating),
the major component in most all of the major indices, was +1.0% on 163% more
than its average volume, and it was about the only component that did that.
In the financials, you had
(
C |
Quote |
Chart |
News |
PowerRating) +1.7% on 77% of its average volume,
(
BAC |
Quote |
Chart |
News |
PowerRating)
+1.2% on 63% and
(
MWD |
Quote |
Chart |
News |
PowerRating) +1.5% on 62% of its average volume. In the cyclicals,
(
WY |
Quote |
Chart |
News |
PowerRating) led at +3.1% on just average volume, while
(
IP |
Quote |
Chart |
News |
PowerRating) was +2.3% on 76%
of its volume. Many of the other major components of the XLB (basic industry
SPDR) traded between 60% – 70% of their normal volume. There was, however, an
increase in volume and price in some of the more defensive blue chips like
(
KO |
Quote |
Chart |
News |
PowerRating),
(
MO |
Quote |
Chart |
News |
PowerRating),
(
JNJ |
Quote |
Chart |
News |
PowerRating), and
(
BAX |
Quote |
Chart |
News |
PowerRating) and
(
BCR |
Quote |
Chart |
News |
PowerRating) — both medical instruments
supply stocks. Net net, yesterday’s market action didn’t provide much more insight
than what I outlined in yesterday’s commentary about the primary trend and about
“what is until shown otherwise.”
| size=2> |
Tuesday
12/2 |
Wednesday
12/3 |
Thursday
12/4 |
Friday
12/5 |
Monday 12/8
|
| color=#0000ff>Index | |||||
| color=#0000ff>SPX | |||||
| color=#0000ff>High |
1071.22
|
1074.30
|
1070.37
|
1068.41
|
1069.59
|
| color=#0000ff>Low |
1065.22
|
1064.63
|
1063.16
|
1060.21
|
1060.93
|
| color=#0000ff>Close |
1066.62
|
1064.73
|
1069.72
|
1061.50
|
1069.20
|
| color=#0000ff>% |
-0.3
|
-0.2
|
+0.5
|
-0.8
|
+0.7
|
| color=#0000ff>Range |
6
|
9.7
|
7.2
|
6.9
|
8.7
|
| color=#0000ff>% Range |
23
|
0
|
91
|
19
|
95
|
| color=#0000ff>INDU |
9854
|
9873
|
9931
|
9863
|
9965
|
| color=#0000ff>% |
-0.5
|
+0.2
|
+0.6
|
-0.7
|
+1.0
|
| color=#0000ff>Nasdaq |
1980
|
1960
|
1969
|
1938
|
1949
|
| color=#0000ff>% |
-0.5
|
-1.00
|
+0.4
|
-1.6
|
+0.6
|
| color=#0000ff>QQQ |
35.69
|
35.26
|
35.63
|
35.05
|
35.26
|
| color=#0000ff>% |
-0.6
|
-1.2
|
+1.1
|
-1.6
|
+0.6
|
| color=#0000ff>NYSE | |||||
| color=#0000ff>T. VOL |
1.38
|
1.42
|
1.38
|
1.22
|
1.19
|
| color=#0000ff>U. VOL |
585
|
609
|
688
|
370
|
738
|
| color=#0000ff>D. VOL |
779
|
783
|
689
|
830
|
438
|
| color=#0000ff>VR |
43
|
44
|
50
|
31
|
63
|
| color=#0000ff>4 MA |
64
|
57
|
55
|
42
|
47
|
| color=#0000ff>5 RSI |
70
|
65
|
72
|
53
|
64
|
| color=#0000ff>ADV |
1614
|
1518
|
1605
|
1437
|
2157
|
| color=#0000ff>DEC |
1634
|
1749
|
1641
|
1787
|
1088
|
| color=#0000ff>A-D |
-20
|
-231
|
-36
|
-350
|
+1069
|
| color=#0000ff>4 MA |
+810
|
+481
|
+312
|
-159
|
+113
|
| color=#0000ff>SECTORS | |||||
| color=#0000ff>SMH |
-0.7
|
-1.8
|
-0.6
|
-3.6
|
-0.2
|
| color=#0000ff>BKX |
-0.1
|
-0.4
|
-.03
|
-0.9
|
+1.3
|
| color=#0000ff>XBD |
-.08
|
+0.6
|
-0.9
|
-1.4
|
+1.1
|
| color=#0000ff>RTH |
-2.2
|
-0.8
|
-0.4
|
-0.9
|
+0.1
|
| color=#0000ff>CYC |
-0.4
|
+0.4
|
-.05
|
-1.0
|
+1.3
|
| color=#0000ff>PPH |
-0.2
|
+0.5
|
+0.2
|
-0.5
|
+0.9
|
| color=#0000ff>OIH |
+1.2
|
-1.3
|
+3.4
|
+2.3
|
+0.1
|
| color=#0000ff>BBH |
+0.5
|
-0.4
|
-0.3
|
-0.8
|
-0.1
|
| color=#0000ff>TLT |
+0.4
|
-0.4
|
+0.2
|
+1.6
|
-0.7
|
| color=#0000ff>XAU |
+.07
|
-.07
|
-2.6
|
+1.8
|
-0.3
|
For Active Traders
The Dow closed at new highs, 9965, and we are
back at that 10,011 zone again, which is the .618 retracement to the 11,750
all-time high from the October 2002 low. The SPX closed in the top of its
range
after a three-bar pullback from its 1074.30 rally high and above all of its
rising EMAs. The QQQs closed in the top of the range on a re-cross of the
20-day
EMA which is 35.17. The double tops are 36.18 and 36.12. The Nasdaq did the
same, closing at 1948.85 vs. its 20-day EMA of 1944.53.
In yesterday’s trading action, the Nasdaq
gave
traders the best afternoon setup with an RST pattern and long entry on the
2:40
p.m. bar (five-minute chart) accompanied by a positive divergence in
momentum
(chart in tomorrow’s commentary). This corner passed the futures/index
proxies
and went with the RST on MSFT which was an early setup with the fifth swing
point low being the 11:10 a.m. bar. A Slim Jim setup followed in the
afternoon,
with entry above 26.04 which ran up to 26.32, closing at 26.24. As I said
recently, you should continue to be involved in MSFT and GE every day they
set
up going into year-end. It is a smaller daily range, but you adjust your
size
up.
Today’s
Action
It is still “show me” today as we go
through this full moon period where things always seem to happen, and also the
last three weeks of the year when trading becomes very erratic. There will be
more sudden price moves, like you had yesterday, but in both directions. The
futures are green at 8:30 a.m. ET, with the S&Ps +3.20, the Dow +18 and
Nasdaq +6.50. If early buyers show up, then retracements or gap pullback setups
will be the better risk/reward. Don’t chase first entries above yesterday’s
highs. It’s the last Federal Reserve day of the year, so any doublespeak might
provide opportunity, but that would be a reaction trade in the opposite direction
of the emotion to any news.
Have a good trading day,
Kevin Haggerty
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