Another Jobs Fire Drill
For
the fourth day in succession, NYSE
volume hit the 1.7-billion-share level, which is just 20% over its average
volume, the volume ratio was 34, and breadth -495. The financials, led by the
BKX, -5.3%, and XBD, -4.8%, and the SOX, -6.5%, were the downside leaders, and in
my opinion, the two most important sectors that must show strength before any
sustained upside move, so that is a major negative.
There was an early Trap
Door move from an inside bar setup with entry above 825.74 on the 10:00 a.m. ET
bar. (See your five-minute charts.) This move ran to 840 by just 10:15 a.m.
after a three wide-range-bar up, then a reversal bar bottom-of-the-range close
ended the rush. From this 840 intraday high, it traded down to the 817.25
intraday low, then rallied to 829. The first move from 818.28 failed at 823, and
a move before that one from an 821 low had failed at 826. Bottom line is after
the first hour, it was all chop.
The SPX closed in the
bottom of the range, below Wednesday’s low, confirming that as a lower swing
point. As I said the other day, if 800 holds, the inverse head-and-shoulder
breakout is above 856, which is also the 20-day EMA level. On the downside, the
highest probability is that the 775.68 low gets taken out. If it gets close to
the number, the Program Gang will attack because it is the perfect level to
front-run their own trade, as they initiate the sell side first, forcing new lows
and stops, then happily take the long side at a nice discount. After that, there will
be a sharp reflex up.
Today we start out with
media mania on their favorite economic circus number, which is the jobs report
at 8:30 a.m. You know, the one that continually gets revised every month but yet
most often sets up an overreaction trade for traders? The empty suits with their
hype are the sequence trader’s best friends because it gets the indices to
different levels very quickly with all the travel range. If the jobs report
results in a quick down move, I will focus on semis and banks today for a quick
oversold intraday reflex trade.
I would like to see more
lows into Monday or Tuesday, which corresponds to my cycle time period, so I
would then look for a tradable reflex of more than a day or two. A big low today
would have me looking to get long some time during the day if the rally is
positive into the close. The name of the game is indices and HOLDRs, no
stocks.
Have a good trading day
and have a better weekend.
Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Thursday’s NYSE TICKS