Bonus Day For Traders
What Wednesday’s Action Tells
You
The tree shook as buyers evaporated and price
came back to the zone, plus a few points lower, as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
hit
an intraday low of 1076.32, taking out Monday’s 1079.63 low. That was a -19
point shaking of the tree from the previous day’s 1095.49 close. The 2:00
p.m. –
4:00 p.m. ET reversal took the SPX up to a 1097.26 close, +0.2% on the day,
and
a bonanza for daytraders, especially after being stopped out of carryover
positions in index proxies from Tuesday, but the worst case was breakeven
unless
you froze at the trigger.
The afternoon reversal took the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
+0.3% to 10,045, and the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s +0.2% to a 35.26 close. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) and
(
SMH |
Quote |
Chart |
News |
PowerRating) also had sharp upside reversals, but ended red
at
-0.3% and -1.3%.
NYSE volume was 1.7 billion and the volume
ratio
was actually 51 and breadth +143. All of the primary sectors closed green,
except for the SMH. What are the reasons? Who cares? Because they are always
after
the fact and the move. These things always seem to heat up around key time
and
price zones. May 3 – 7 was the .618 time retracement in trading days between
the
March 24, 2000, SPX all-time high and the October 10, 2002, low. The zone
itself
is one of confluence and both were anticipated in advance by you sequence
traders. The SPX confluence is the 200-day EMA at 1080, AB=CD at 1075, .236
retracement to 789 also at 1075, .382 retracement to the 1990 low at 1072,
.236
retracement to 769 at 1070, and the 12-month EMA now at 1068.Â
| Â | Thursday
5/6 |
Friday
5/7 |
Monday
5/10 |
Tuesday
5/11 |
Wednesday
5/12 |
Index |
|||||
| SPX Â |
|||||
High |
1121.53 | 1117.33 | 1098.70 | 1095.69 | 1097.55 |
Low |
1106.20 | 1098.63 | 1079.63 | 1087.12 | 1076.32 |
Close |
1113.96 | 1098.69 | 1087.12 | 1095.49 | 1097.26 |
%Â |
-0.7 | -1.4 | -1.1 | +0.8 | +0.2 |
Range |
15.3 | 18.7 | 19.1 | 8.6 | 21.2 |
% Range |
51 | 0 | 39 | 97 | 95 |
INDUÂ |
10241 | 10117 | 9990 | 10019 | 10045 |
%Â |
-0.7 | -1.2 | -1.3 | +0.3 | +0.3 |
Nasdaq  |
1937 | 1918 | 1896 | 1931 | 1926 |
%Â |
-1.0 | -1.0 | -1.1 | +1.8 | -0.3 |
| QQQÂ |
35.26 | 34.97 | 34.67 | 35.19 | 35.26 |
%Â |
-0.8 | -0.8 | -0.9 | +1.5 | +0.2 |
NYSEÂ |
|||||
T. VOLÂ |
1.51 | 1.65 | 1.91 | 1.53 | 1.70 |
U. VOLÂ |
297 | 182 | 276 | 1.19 | 851 |
D. VOLÂ |
1.20 | 1.45 | 1.62 | 318 | 807 |
VRÂ |
20 | 11 | 15 | 79 | 51 |
4 MAÂ |
51 | 37 | 26 | 31 | 39 |
5 RSIÂ |
37 | 23 | 17 | 33 | 36 |
ADVÂ |
635 | 259 | 353 | 2703 | 1732 |
DECÂ |
2720 | 3184 | 3099 | 682 | 1589 |
A-DÂ |
-2085 | -2925 | -2746 | +2021 | +143 |
4 MAÂ |
-226 | -1128 | -1941 | -1434 | -877 |
SECTORSÂ |
|||||
SMHÂ |
+0.3 | +1.2 | +1.0 | +2.7 | -1.3 |
| BKXÂ |
-1.3 | -2.4 | -1.6 | +0.4 | +1.3 |
XBDÂ |
-1.9 | -2.7 | -0.5 | +2.3 | +0.5 |
RTHÂ |
-1.9 | -2.1 | +1.0 | 0 | +0.4 |
CYCÂ |
-1.6 | -2.5 | -1.7 | +1.5 | +0.1 |
PPHÂ |
+0.2 | -0.6 | -1.5 | 0 | +0.2 |
OIHÂ |
-1.8 | -2.9 | -2.9 | +1.2 | +0.4 |
| BBHÂ |
-2.0 | -1.8 | -1.4 | +1.7 | +1.2 |
TLTÂ |
-0.3 | -1.3 | -0.2 | +0.5 | -0.7 |
| XAUÂ |
-2.6 | -4.3 | +2.4 | +1.9 | -1.0 |
^next^
For Active
Traders
After getting stopped out early and armed
with
the anticipated zone information, you got the price action that put you in
the
game. The
(
SPY |
Quote |
Chart |
News |
PowerRating) broke below the Flip Top 109.36 low, which was below all
of
the EMAs (five-minute chart) and traded down to a 108.06 intraday low. The
SPX
equivalent intraday low was 1076.32, right at the zone confluence and also
at
the 2.0 volatility band, which was 1076.59. This set up the 1,2,3 lower
bottom
with entry above the previous 108.20 low and 200-day EMA at 108.43. The
re-cross
of the 200-day EMA took the SPY on a moonshot to 110.53 and a 110.45 close.
The
first re-cross of the 200-day EMA after the 108.20 low carried to 108.64,
breaking the down trendline, but failed and made a 108.06 low, setting up
the
1,2,3 lower bottom. You were stopped out no worse than breakeven or small
red if
you took the first one as this corner did.
The QQQs had the same setup, and I have
included
both the SPY and QQQ charts in today’s commentary. The QQQ hit a 34.27
intraday
low vs. the 2.0 volatility band of 34.26 and then closed at 35.26. The
(
DIA |
Quote |
Chart |
News |
PowerRating)
hit 98.81 vs. the 2.0 volatility band of 98.61 and closed at 101. The
(
IWM |
Quote |
Chart |
News |
PowerRating)
bounced off its 12-month EMA of 106.29 and yesterday’s 106.30 low, closing
at
110.08, also re-crossing the 200-day EMA of 108.13. If you have my seminar
and
sequence trader material, it was a real bonus day for you.
Today’s
Action
You know the SPX zone confluence. The SPY has
the
200-day EMA at 108.43 and 12-month EMA at 107.24. The QQQ 12-month EMA is
34.18,
with 34 the previous primary low and 34.74 the current 200-day EMA. Those of
you
that are involved with my “523” trend action can see that the QQQs
closed right
at the line, which is your initial focus today. The line for the SPY is
110.92
starting the day. The DIA closed at 101, which is also the 20 EMA on your
120-minute chart, so it’s in play early.
There’s lots of 8:30 a.m. economic noise
today,
with the PPI, initial claims, and retail sales, so any surprises should give
you
traders the overreactions needed to have a good day.
Have a good trading day,
Kevin Haggerty
Â
