A Win-Win, Regardless Of Direction


Anything worthwhile Friday was initiated in the morning.

The first SPX
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opportunity
was a five-bar pullback to the 20-period EMA which ran 9.5 points from entry to
839.61, which is right at the 839.55 .618 retracement between 954 and 769. 840
was also the 2.0 standard deviation band mentioned Friday. The SPX declined once
again to the 20 EMA on a four-bar pullback. If you took this entry, it ran about
7 points to 841.39 and failed at this key level once again. Good short entry was
the reversal of 840 and the 839.55 levels to the downside, which traded down to
828.26 by the 12:50 p.m. bar. The day ended right there as the SPX traded
sideways for the rest of the day into the 833.27 close, up just 0.2% on the day.
The Dow
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ended +0.5%, while the
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s finished flat. The
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s lost 1.5%. They have advanced +21% in 23 trading days since Feb. 10
off the 20.36 low vs. the 20.25 .786 retracement to the October low.

The SMHs gained +12.9%
low to high in the past three days, while the SPX was +6.6%. The cap-weighted
basket of stocks all outperformed the SPX, with
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+10.7%,
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+11.9%,
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+10.8%,
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+8.0% and
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+11.9%. NYSE volume on
Friday was 1.5 billion, a volume ratio of 51, and breadth +304. Both the
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and QQQs closed with doji bars on the narrowest range of the past
three days. The QQQs traded 90 million shares, the most since Feb. 6 when they
traded 103 million shares.

The futures are early red
as it appears the countdown has started. I have no interest in any subjective
commentary regarding a “what if” scenario, as I have already made that bet with
synthetic straddles from the lower implied volatility levels. That’s a win-win,
regardless of direction, as long as there is volatility. No one can know the
ramifications or fallout when we go into that country and what might happen
simultaneously in the United States.

On top of all that’s
going on today with the Iraq news, there is a Triple Witch this Friday. That
means that traders obviously should not fall in love with any positions and
should go out flat at night.

Being that today is St.
Patrick’s Day and there is a new addition in our family, I plan to be out and
about from noon today until whenever, so the next commentary will be Wednesday
morning.

Have a good trading day,
and have a great St. Patrick’s Day.

Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Friday’s NYSE TICKS