Adrift
Instead
of a rally through the end of the month from
the Aug. 22 minor-cycle low, the
(
SPX |
Quote |
Chart |
News |
PowerRating) rallied 3% from Aug. 22-27, then fell
4.4% into Aug. 31. The index closed at 1133.58, right at the .786 zone, which is
1131. The
(
NDX |
Quote |
Chart |
News |
PowerRating) rallied from the Aug. 22 low of 1468 to 1602 on Aug. 27 for
a +9.1% gain, but closed Friday at 1469.70, giving back the entire rally. The
.786 number is 1504.Â
The channel down from the
May top after breaking the down trendline in the April rally is now over three
months. The market continues to overreact to news both ways, creating good
daytrading volatility. The retracements for short trades have all come from the
50- and 20-day EMAs on both the NDX and SPX. We don’t know whether this will be
a 1-2-3 higher bottom which usually happens between the .50 and the .786
retracements, and we are right at the .786 zones right now, or possibly a double
bottom. The next possibility is
the 1-2-3 lower bottom, which seminar attendees know as “shake and
bake.” This is a very real possibility now with a confluence of cycles
coming up in late September or early October.
Having been out Friday, I
see that most all of the tech indexes finished green with a contra-minus day for
biotechs
(
BTK |
Quote |
Chart |
News |
PowerRating), drugs
(
RLX |
Quote |
Chart |
News |
PowerRating) and gold
(
XAU |
Quote |
Chart |
News |
PowerRating), which happens often. The
overall volume was well below average, with positive volume ratios and breadth.
Probably just tucking it in for the weekend. We had narrow-range inside days for
the SPX, the NDX and Dow. Looking at the semis during the four-day rally then
four-day decline, I see declining volume during both of them, but there were 15%
to 20% moves in many of the key semis, which provided opportunity both ways. The
(
SMH |
Quote |
Chart |
News |
PowerRating)s gave us a reversal bar right at the 100-day EMA which terminated the
rally.
We start today looking
for direction from the Generals’ money flow and with very few long setups from
Friday’s action.
|
(September
|
||
|
Fair Value
|
Buy
|
Sell
|
|
1.50
|
2.60
|
.35
|
Stocks
Today
We still have to make the
plan, then trade the plan, so we’ll pick some stocks that are close to
inflection points and gave us some indication of buying or selling pressure on
Friday, even though in most cases it wasn’t volume. In the semis,
(
KLAC |
Quote |
Chart |
News |
PowerRating),
(
MU |
Quote |
Chart |
News |
PowerRating),
(
BRCM |
Quote |
Chart |
News |
PowerRating),
(
MCHP |
Quote |
Chart |
News |
PowerRating) and
(
LRCX |
Quote |
Chart |
News |
PowerRating).
Other stocks:
(
BCC |
Quote |
Chart |
News |
PowerRating),
(
GP |
Quote |
Chart |
News |
PowerRating),
(
LMT |
Quote |
Chart |
News |
PowerRating),
(
AA |
Quote |
Chart |
News |
PowerRating),
(
AZO |
Quote |
Chart |
News |
PowerRating),
(
FDO |
Quote |
Chart |
News |
PowerRating),
(
IMCL |
Quote |
Chart |
News |
PowerRating),
(
BGEN |
Quote |
Chart |
News |
PowerRating) and
(
AMGN |
Quote |
Chart |
News |
PowerRating).
On the short side,
(
THC |
Quote |
Chart |
News |
PowerRating),
(
HCR |
Quote |
Chart |
News |
PowerRating) and
(
BMY |
Quote |
Chart |
News |
PowerRating), all with tight stops.Â
Have a good trading day.
Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Friday’s NYSE TICKS
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