Bonus Day For Traders
What Friday’s Action Tells
You
The market action on Friday speaks for itself
as
the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) had a range of -6.2 points to an 1148.71 low on the
9:35
a.m. ET bar, then a reversal of +14.5 points to an intraday high of 1163.23
(new
rally high) on the 10:40 a.m. bar, then a third knife move, which was down
to
1152.11, or -11.1 points. That’s 31.8 points of travel range in the first
hour
and 45 minutes. There’s nothing like a jobs report on the first Friday of
the
month into a full moon weekend. Any more comment on it is a waste of time,
as
was the media hysteria that accompanied it. This corner put some
(
TLT |
Quote |
Chart |
News |
PowerRating)s
out
on the gap and will do more on any further rise.
The week itself wasn’t all bad as the SPX,
led by
the financials, finished at 1156.82, +1.2%. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was +0.5%
and
wasn’t really close to making any new rally high Friday, closing at 10,596
off a
10,651 intraday high. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) and
(
QQQ |
Quote |
Chart |
News |
PowerRating) both finished
negative at -0.4% and -0.6%, while closing within their short-term downtrend
channels, with the QQQs at 36.65 right on its 50-day EMA of 36.62, so that’s
where the game starts on Monday.
After all that futures nonsense in the
morning,
the major indices went sideways for the remainder of the session, and it was
not
even a high-volume day, as NYSE volume was 1.37 billion. However, the mix
was
positive with the volume ratio 60 and breadth +1161.
In the primary sectors, the XBD led at +2.5%
for
the week, followed by the
(
OIH |
Quote |
Chart |
News |
PowerRating), +1.5%, then the BKX, +1.3%. I exclude
the
(
BBH |
Quote |
Chart |
News |
PowerRating) because of the significant influence of
(
DNA |
Quote |
Chart |
News |
PowerRating) on the HOLDR
last
week.
The
(
SMH |
Quote |
Chart |
News |
PowerRating) was +1.2% for the week, closing
in
the middle of its downtrend channel at 41.25 with the upper line at 43 and
the
lower at 39 with the 50-day EMA above at 41.76. For the past eight days, the
SMH
has been in a closing range of less than one point between 41.85 – 40.90.
Lots
of noise and news, but no real net movement on balance.
Of the 19 major indices, sector SPDRs and
HOLDRs
that I use in my composite, only four are below their 20-day EMAs, and they
are
the QQQ at 36.65 vs. a 36.84 20-day EMA, the Dow 10,596 vs. 10,598, the XLK
20.80 vs. 20.95 and the SMHs 41.27 vs. 41.66. Their five-day RSIs are all
below
50, so if the SPX takes the lead to new highs, I would look for reflex
opportunity in these four.
On the other side of that coin, the extended five-day
RSI members of that composite are as you would expect: XLF 82.84, BKX 82.48,
XLU 81.63 (utility SPDR) and XBD 76.81. Of course, they are all financials.
The IWM (the Russell 2000 iShare) five-day RSI is 73.70, while the SPX is 69.08
vs. the Dow at 46.64. Financials like
(
FNM |
Quote |
Chart |
News |
PowerRating), +3.3%, and
(
FRE |
Quote |
Chart |
News |
PowerRating), +2.9%,
had big days on short covering, along with regular buying.
| size=2>Â | Monday
3/1 | Tuesday
3/2 | Wednesday
3/3 | Thursday
3/4 | Friday
3/5 | Net |
| color=#0000ff>Index | Â | Â | Â | Â | Â | Â |
| color=#0000ff>SPX | Â | Â | Â | Â | Â | Â |
| color=#0000ff>High | 1157.45 | 1156.54 | 1152.44 | 1154.97 | 1163.23 | 1163.23 |
| color=#0000ff>Low | 1144.95 | 1147.31 | 1143.78 | 1149.81 | 1148.71 | 1143.78 |
| color=#0000ff>Close | 1155.97 | 1149.10 | 1151.02 | 1154.88 | 1156.86 | 1156.86 |
| color=#0000ff>% | +1.0 | -0.6 | +0.2 | +0.3 | +0.2 | +1.1 |
| color=#0000ff>Range | 12.5 | 9.2 | 8.7 | 5.2 | 14.5 | 19.5 |
| color=#0000ff>% Range | 88 | 21 | 83 | 97 | 56 | 67 |
| color=#0000ff>INDU | 10678 | 10591 | 10593 | 10588 | 10596 | Â |
| color=#0000ff>% | +0.9 | -0.8 | +.02 | -.05 | +.07 | +0.5 |
| color=#0000ff>Nasdaq | 2058 | 2040 | 2033 | 2055 | 2048 | Â |
| color=#0000ff>% | +1.4 | -0.9 | -0.3 | +1.1 | -0.4 | +0.9 |
| color=#0000ff>QQQ | 37.03 | 36.61 | 36.39 | 36.81 | 36.65 | Â |
| color=#0000ff>% | +1.3 | -1.2 | -0.6 | +1.1 | -0.3 | +0.3 |
| color=#0000ff>NYSE | Â | Â | Â | Â | Â | Â |
| color=#0000ff>T. VOL | 1.45 | 1.48 | 1.33 | 1.26 | 1.37 | 1.38 |
| color=#0000ff>U. VOL | 1.17 | 532 | 641 | 783 | 819 | 789 |
| color=#0000ff>D. VOL | 259 | 931 | 654 | 438 | 538 | 564 |
| color=#0000ff>VR | 82 | 36 | 49 | 64 | 60 | Â |
| color=#0000ff>4 MA | 69 | 61 | 57 | 58 | 52 | Â |
| color=#0000ff>5 RSI | 74 | 56 | 58 | 66 | 69 | Â |
| color=#0000ff>ADV | 2508 | 1436 | 1609 | 2035 | 2236 | 1965 |
| color=#0000ff>DEC | 791 | 1852 | 1666 | 1237 | 1075 | 1324 |
| color=#0000ff>A-D | +1717 | -416 | -57 | +798 | +1161 | +3203 |
| color=#0000ff>4 MA | +1194 | +814 | +584 | +510 | +371 | Â |
| color=#0000ff>SECTORS | Â | Â | Â | Â | Â | Â |
| color=#0000ff>SMH | +2.3 | -0.2 | -1.8 | +1.8 | -0.9 | +1.2 |
| color=#0000ff>BKX | +0.5 | -0.5 | +0.6 | -.03 | +1.0 | +1.3 |
| color=#0000ff>XBD | +0.9 | -0.3 | +.02 | +1.1 | +0.6 | +2.5 |
| color=#0000ff>RTH | +1.0 | -1.2 | +0.7 | +0.3 | -.03 | +0.5 |
| color=#0000ff>CYC | +1.6 | -0.9 | -.05 | -.08 | +0.1 | -.05 |
| color=#0000ff>PPH | +0.3 | -0.9 | +0.2 | +0.4 | +0.2 | +0.2 |
| color=#0000ff>OIH | +2.8 | +0.3 | -0.7 | -0.3 | -0.6 | +1.5 |
| color=#0000ff>BBH | +0.2 | -0.2 | +0.9 | +0.7 | +1.6 | +3.2 |
| color=#0000ff>TLT | -.05 | -0.6 | -0.2 | +0.4 | +1.9 | +1.0 |
| color=#0000ff>XAU | +1.1 | -3.2 | -.09 | +1.4 | +2.9 | +1.3 |
^next^
For Active
Traders
It was Trap
Doors for the major indices, SMH,
(
INTC |
Quote |
Chart |
News |
PowerRating), and many other big-cap stocks.
You were ready for them, and the media and futures created the setups. The SPX
traded right down to the 1.0 volatility band on the 9:35 a.m. bar and then reversed.
The SPY and
(
DIA |
Quote |
Chart |
News |
PowerRating)s reversed immediately, so you either faded the gap down
to the SPX 1.0 volatility band, which is 1148 and change, or you didn’t. It
wasn’t a hard read if you are a cynic on the economic report media hysteria,
as I am, and the futures games that go with it. The futures gave you the early
read as the E-mini hit its 1146.50 low on the 9:10 a.m. bar and had already
moved to 1149, ahead of the SPY and DIA reversal.
If you were looking for that three- or
four-bar
Trap Door reversal entry, you got it in stocks like INTC with entry above
28.83
vs. the 28.43 200-day EMA. The SMH was the best of the litter with a
dynamite
three-bar triangle pattern, which is in your first-hour module and seminar
materials. Trap Door entry was above 40.90, advancing +2.3% to 41.80. The
Trap
Door low was 40.68 on the opening bar vs. its 1.5 volatility band of 40.59
and
2.0 volatility band of 40.23. This was a no-brainer setup.
The SPX spiked up to 1163.23, most of which
was
due to other than the Generals buying, set up another volatility band trade
with
a three-bar reversal entry on the E-minis below 1161.50 and on the SPY below
1116.74.
Today’s
Action
After Friday’s fiasco, there is nothing more
prudent to do other than watch the early going. That is provided we don’t
get
any carry-over Trap Door action due to our media friends. I am doing this
Sunday
night for Monday, and I am on the road, as they say, so I know not what is
ahead
until I get there. The QQQs and DIAs are right at EMAs, so that is a good
start
in the early going.
Have a good trading day,
Kevin Haggerty
P.S. You can finally learn
what traders have been asking me to teach them for years—