Casino Volatility
The S&P 500
(
$SPX.X |
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Chart |
News |
PowerRating)
followed suit with the Nasdaq, as it took out its 1998 low of 923.31,
closing at 920.47 or -3.4%.The Nasdaq
(
$COMPQ |
Quote |
Chart |
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PowerRating),
which had already taken out it 1998 low, hitting 1336 on July 3, closed at 1346,
-2.5% on the day. The Dow
(
$DJX.X |
Quote |
Chart |
News |
PowerRating)
closed at 8813.50 or -3.1%, but it is 16% above its 1998 low of 7400. I would
like to see it taken out going into the 20-year and four-year major cycle period
in the fall, but it is not a necessity for the major indices to bottom.
New York Stock Exchange volume jumped to
1.8 billion, about 35% above average, and a volume ratio of just 13 with 1.5
million down and just 233 million up. Breadth was -1548. The Nasdaq volume was
average at 1.8 billion, and a volume ratio of 23. The Semiconductor equipment
stocks took another hit and led the
(
$SOX |
Quote |
Chart |
News |
PowerRating) to a -3.8% close, to 348.56,
about back to the 344 level where the +15.4% reflex started. The rest of the
major sectors were red across the board, the
(
$BTK |
Quote |
Chart |
News |
PowerRating) leading the downside at
-7%.
It’s been an interesting five days as the
SPX went from 935 to 994 (or +6.3%) in two days, thanks to the program gang
shorts and, as I am told, a few large hedge funds that made a play last Friday.
It has declined 7.4% over the last three days, from 994 to 920, taking out the
1998 low yesterday. In hindsight, I guess having just Newmont Mining and ABX on
the two screens (mentioned
yesterday) was an omen.
For today, we start with the major
indices back to their extreme longer-term bands. The SPX is just below its 2.0
band, and the 3.0 band is just -2.7% below last night’s close. The Dow is just
0.5% above its 2.0 band, while the Nasdaq has some more downside room before
hitting the 2.0 band.
In between the media and political
hysteria, there will continue to be excellent intraday opportunities, so take
them when they set up both ways. It’s a series of probes with tight stops and
that way you will catch the larger intraday moves. Based on the last three days’
action and the fact that we should focus on stocks with ample daily range, you
have to be all over the Semis and biotechs today. The SOX has declined -12.5%,
the BTK -14.6% over the past three days. For potential retracement short setups,
know your Fib retracement levels back to yesterday’s intraday highs on the major
indices and HOLDRs.
Have a good trading day
and keep your helmets on.
Five-minute chart of
yesterday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
yesterday’s NYSE TICKS