Brokers In Focus — Here’s Why
What Thursday’s Action Tells
You
When the New York Stock Exchange volume is
1.03
billion shares, equaling the lowest day this year, and the SPX
(
$SPX.X |
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PowerRating)
daily range is just 4.3 points, there’s not much trading to talk about. The
major indices were essentially flat, with the SPX closing at 1105.09,
+0.01%,
and the Dow
(
$INDU |
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PowerRating) 10,173, -0.08%. The technology side had a bit more
movement, with the
(
QQQ |
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PowerRating) and Nasdaq
(
$COMPQ |
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PowerRating) both -0.4% to close
at
34.40 and 1853.
The volume ratio was neutral at 55 (45 – 55
is
neutral) and breadth +357.
In the sectors, it was energy up, with the
(
OIH |
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PowerRating) +1.7% and the semis down, with the
(
SMH |
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PowerRating) -1.0%, as it
continues
the bouncing ball trading. The SMH was +1.0% on Monday, followed by -2.3%,
+1.1%
and -1.0% yesterday. That’s enough to keep daytraders busy and frustrate the
hell out of position holders. The
(
TLT |
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PowerRating) — bond proxy — advanced for
the
third day at +0.6%, having bounced off the 20-day EMA on Tuesday, and that
is
not what we want to see when the economy is supposedly moving along in the
business cycle.
For Active
Traders
The focus energy stocks provided some
opportunity
after their opening down move. I have included the daily and five-minute
charts
of one of our focus stocks,
(
SII |
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Chart |
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PowerRating).
On the daily chart, you can see that after
the
thrust move (1 on price and volume), there was a three-day consolidation,
which
often follows thrust. The initial thrust put SII above all of its 20-, 50-
and
200-day EMAs, so the four-day range got my attention. Entry from the range
was
above the previous day’s high at 56.07, but as you can see on the
five-minute
chart, there was an early entry above 55.57. The break out of the range put
price above all of its 20, 60 and 240 EMAs, so it was a viable trade setup
in
light of the daily chart.
Retracements, and also continuations from
contracted volatility patterns, have been very good to us, so why not take
the
trade? The extent of the move was a decent bonus.
Today’s
Action
Three focus energy stocks that remain in
five-day
ranges and in an “above the line” status are
(
WFT |
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PowerRating),
(
DO |
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PowerRating)
and
(
RDC |
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PowerRating).
Also, you should have
(
AHC |
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PowerRating) on the list as it has pulled back to a
support
level.
The XBD was +0.8%, with stocks like
(
MWD |
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PowerRating),
+2.0% yesterday, which has rallied 13 days to close at 52 vs. its 200- and
233-day EMAs at 52.09 – 52.19.
(
GS |
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Chart |
News |
PowerRating), +1.2% yesterday, closed at 91.12 vs.
its
233-day EMA at 92.39 and 200-day EMA at 92.68. If the market goes red, these
stocks are at levels where there can be some intraday short
opportunity.
In other brokers,
(
LEH |
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Chart |
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PowerRating) has traded right
through the 200-day EMA the past two days and
(
BSC |
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PowerRating), the strongest of
all
brokers, closed at 89.12 and will continue to another all-time high above
91.76.
(
MER |
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PowerRating) has some more room and is in a five-day range, closing yesterday
at
51.75 vs. a range high of 52.15. The high close of the range is 51.87. The
233-
and 200-day EMAs are up at 53.65 and 53.82.
Net net, there is a lot going on in the
brokers
price wise, so they remain a focus, just as they have been all along with
the
semis and energy stocks.
Other daily range setups to watch are
(
KSS |
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Chart |
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PowerRating)
in a nine-day range just above its 47.60 and 47.01 233- and 200-day EMAs,
closing yesterday at 48.24.
These is the last three trading days of the
month, and the Generals have managed to close the SPX at or above 1111.92
(last
year’s close) each month that it has traded below that number. The SPX
topped at
an 1163.23 high in March, traded down to 1087, but closed the month at 1126.
In
May, it hit 1076, but closed the month at 1121. In July, it hit a 1079 low,
but
closed at 1101.72. So far this month, it has made a 1061 low, closing
yesterday
at 1105.09. I would imagine that’s enough reason for us to look for any
intraday
setups if there is any significant weakness today or tomorrow.
Have a good trading day,
Kevin Haggerty
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