You Can’t Get Lucky If You Don’t Take The Trade
What Tuesday’s Action Tells
You
The SPX made a double bottom yesterday with an
intraday low of 976.08, versus the 975.63 low the previous day. Entry was above
the 10:50 AM bar high of 977.54, or 976.50 on the E-mini, and 98.13 on the SPY.
The double bottom was at the upper end of the 977-972 confluence mentioned in
yesterday’s commentary. After entry, the trade accelerated due to the "Dead
Son’s Bounce," but no shame in getting lucky, but it can’t happen unless you
take the trade. After the news, the SPX ran up to 990.29 on the 12 PM bar, and
that’s where the spike ended as the SPX declined to 982.81 by the 1:35 PM bar,
rallied to 990 again by the 3:05 PM bar, closing at 988.10, +0.9% on the
day.
NYSE volume was on the light side at 1.3 billion and in fact, before 11AM, it
was on a run rate of about 1.4 billion, so the move was more futures induced
rather than the Generals rushing in to buy stocks up. The volume ratio was 72
while the breadth was only +449, which again highlights the move by the
big cap index stocks accelerated by the futures. It was primarily a technology
and basic industries led rally. The Nasdaq finished up 1.5%; the QQQ +1.4%. The
SMH were strong at +3.3%, XLK, which is the technology SPDR, +2.2%, XLB, the
basic industry SPDR, +2.0%, and the cyclical index, CYC, +1.7%.
The semis were led by Texas Instruments,
(
TXN |
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News |
PowerRating),
+7.6%, on 62% more than its 30-day average daily volume, and the move was based
on the earnings hype. KLA-Tencor
(
KLAC |
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Chart |
News |
PowerRating) advanced +5.4%, made new highs on
121% more than its 30-day average daily volume, while Novellus
(
NVLS |
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Chart |
News |
PowerRating) was
+5.1%, bouncing off its 50-day EMA on 62% more than its average volume. Applied
Materials
(
AMAT |
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Chart |
News |
PowerRating) also made a major move at +5%.
The brokers were strong at +1.8% but it was on below average volume. The BKX was
+1.2% while the OIH finished red at -1.8%, as did the PPH, -0.2% but has now
retraced back to its 200-day moving average, and trying to look for some stocks
that set up there. The RTH, which is the retail HOLDR, was a market performer at
+0.8%.
After yesterday’s trading activity, the QQQ
closed above its rising 20-day moving average of 31.19 at 31.34, after a 5-day
retracement. Continuation today is above 31.50 and the 20-day EMA is an early
pivot both ways for daytraders. The SPY closed at 99.17, just below its 20-day
EMA at 99.32, so that is also a key trading level for traders to focus on today.
Today’s Plan
Just as the Dow closed yesterday around the
midpoint of its month-long symmetrical triangle, the midpoint of the SPY trading
range since June 17 is 99.30. Yesterday’s SPY intraday low of 97.91 was just
above its 97.60 50-day EMA and its one-month 2.0 standard deviation band. If the
game goes green today, some stocks that have retraced over the past five days
and have good daily chart setups and should be on your focus list today are:
GILD, ESRX, EASI, FRED, NVLS, ZRAN, MERQ, EBAY, ZBRA, and TARO. If it gets very
aggressive, some stocks at their trading range highs are PCAR, GENZ, SIAL,
and MU. Should there be any follow up in the basic industry stocks, keep DOW,
FLR, and CBE on your list. In the financials, C and BAC both set up. On the
short side, if we go red, I favor the index proxies, which are trading at their
20-day EMA levels.
Have a good trading day.
Kevin Haggerty
