Using Sector Action To Your Advantage
When ‘The Generals’ are
leading, it often makes sense to look for a trade in the sector.
Quite often, stock leadership in a market
heavyweight is a harbinger of higher prices in the corresponding ETFs and HOLDRs–and
an opportunity to still catch a high-probability trade by using one of these
index proxies instead of the individual equity.
Today, out of the gate I had KLA-Tencor (KLAC)
on my short list of stocks to watch, based on multiple time frame analysis. With
the early action, I went to alert our subscribers to the situation. Truth be
told, it was a very quick move for KLAC, so much in fact that I went from
writing the initial analysis on our TradersWire, and opted to put up the quick
alert via our chatroom (a much easier process, trust me on that). Then, with the
stock at slightly higher levels, but the edge still very apparent, I opted to
post the original analysis for hopefully a broader audience.
09:37:47
Daily/Extended Intraday Setup Alert
KLA-Tencor (KLAC)
has pierced an extended 30-minute chart downtrend line. The issue is also
showing stochastics divergence, with yesterday’s lows being confirmed by a ‘doji’
low into a price support zone. KLAC is up .51 at 54.23.
…but with KLAC leading the charge, but possibly
extended by some traders standards, I saw that the semiconductor proxy (SMH) was
still nicely in pattern, after forging a nice technical low in yesterday’s
trade.
09:43:30
Daily/Extended Intraday Setup
Alert
The semiconductor HOLDRs (SMH)
formed a hammer low off a technical support zone (2 fib levels and gap fill) in
yesterday’s trade. With the index proxy up by .05 at 39.95, triggers for
longs above extended intraday pattern resistance and yesterday’s highs might be
considered above 39.95. The SMH is currently changing hands at this level.
It definitely wasn’t easy–at least in my corner of the universe–as there
was an awful lot of keyboard pounding to get the trade out there on time, but it
would most certainly get the seal of approval, and an ‘A’ for effort from TMs
resident ‘General’…Kevin Haggerty.