Be Flat At Night
Some
sequence returned to the major indexes yesterday
as the markets took a pause. The Nasdaq 100
(
NDX |
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PowerRating), for example, gave you a
Trap Door play with the fourth bar being the setup bar (see your five-minute
charts). Then you got a 1.618 extension move and a 1,2,3 short entry. The
afternoon downtrend which started on the 1:20 p.m. bar was from a double Fib
retracement of .618 and .50, all on yesterday’s five-minute chart. Entry at this
level was from a three-bar narrow-range pattern, which is most often called a
Dynamite Triangle. The dynamics supported the sequences at the time. I will
cover Sequence Trading at the Vegas
seminar. Save the chart. It’s a lesson.
Yesterday’s NYSE volume
dropped to 1.7 billion (which is still 50% above average); a volume ratio of 36
and declines over advances by 698. The
(
$OSX.X |
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(
$SOX.X |
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-6.2% and the
(
$BTK.X |
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oversold rebounds in some of the chemicals and papers. The banks finished
slightly green but the brokers were down almost 2%. The Airlines finished +2%
but after the previous huge down, I certainly don’t consider that a rally.
Coming into today, the last
five days has the NDX -14%, the Nasdaq -11.9%, the Dow -11.6% and the S&P 500
(
SPX |
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PowerRating)
-9%. All indicators are obviously oversold and out at extreme standard deviation
bands, not to mention Triple Witch this Friday. Under normal bear market
conditions, that would be the basis for an excellent rebound but times right now
are not normal because the shooting hasn’t started and we don’t know what the
responses will be. Short-term
trading without an options strategy should be limited to daytrading, going out
flat at the end of the day.
Stocks
Today
Focus on what they threw
away yesterday for any intraday reflex rally. These stocks are also set up on
the daily charts for continuation shorts and/or reversal of yesterday’s lows.
In the brokers:
(
MER |
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PowerRating),
(
MWD |
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PowerRating) and
(
GS |
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PowerRating). In the biotechs: the BBHs,
(
GENZ |
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PowerRating),
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IMCL |
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IDPH |
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and
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GILD |
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PowerRating).
In the semis: the SMHs,
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KLAC |
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PowerRating),
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BRCM |
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MCHP |
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(
NVLS |
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PowerRating) and
(
INTC |
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PowerRating).Â
Remember, on these stocks I
said “reflex rally on the intraday chart.” They are not daily
chart long setups.
Other stocks that look
interesting on the daily charts are:
(
SIAL |
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PowerRating) and
(
IBM |
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PowerRating) which was
up yesterday as it bounced off its .618 retracement level to last December’s
low.
(
PAYX |
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PowerRating) and
(
ORCL |
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CSCO |
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which, trading above today’s high, sets it up as an initial RST entry.
Have a good trading day — and be flat at night.
Five-minute chart of yesterday’s S&P 500 (SPX) with 8-,
20-, 60-
and 260-EMAs
Five-minute chart of yesterday’s NYSE Ticks