Composite Tracks The Generals
What Wednesday’s Action Tells
You
The market action was better as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was +0.5% to 1174.07 vs. +0.4% on Tuesday, but the breadth
expanded to +1420 vs. +66 and the volume ratio was 68 vs. 55. NYSE volume
increased a small amount to 1.64 billion. Technology did a bit better, as
the
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was +1.3% to 2046 and the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) +1.2% to 37.15.
The
semiconductors went back-to-back with the
(
SMH |
Quote |
Chart |
News |
PowerRating) gaining +2.5% following
a
+1.8% day. Energy continues to trade near the highs as crude oil pushes its
upper zone. The
(
OIH |
Quote |
Chart |
News |
PowerRating) was +1.1% and is at the top of my momentum
composite
(see below) over a 50-day period.
Daytraders in the NQs had an initial Gap
Pullback
to the 1499 level from the 1510.50 10:00 a.m. ET high, which then ran to
1518 on
the 3:50 p.m. bar and was followed by a drop to 1505 on the 4:10 p.m. bar,
closing at 1507. Moves like that on the close have nothing to do with the
Generals. The YMs gave traders two RST sell setups into the 10:00 a.m. bar,
if
that was your bias. These were followed by a retracement to the 480 and 240
EMAs
which then ran from 10,476 to 10,513 before fading into the close from 3:50
p.m.
to 4:15 p.m., just like the NQ and ES.
There were some strong moves in focus stocks
like
(
ERTS |
Quote |
Chart |
News |
PowerRating), +9.2% off a retracement to the 50-day EMA and
(
ROK |
Quote |
Chart |
News |
PowerRating), +4.4%
from
a five-bar retracement to the 20-day EMA. Both are “Above the
Line” stocks.
The mood of the market and adjustments made by
the
Generals are quite obvious when you check out the momentum section of my
overall
proprietary composite. I have included that section today as of the close on
01/24/05 with the SPX low of 1163.84. The defensive posture currently in
place
is obvious with the positive momentum led by the OIH, TLT (bond proxy), XLE,
XLU
(utilities) and XLP (consumer staples). The Morgan Stanley Consumer Index
(CMR)
is just below at -9, as compared to the Morgan Stanley Cyclical Index (CYC)
at
-109. Technology has taken the brunt of the decline, as evidenced by the QQQQ,
XLK and also the SMH -121. The defensive posture is also highlighted by the
selloff in the XLB, -92, (basic materials SPDR) and the XLI, -136,
(industrials). Net net, this momentum composite must start to turn upside
down
if the fifth leg is to trade higher than the SPX 1218 high.
The futures are flat after yesterday’s drop
in
the last 20 minutes, so it doesn’t look like a discount/premium opening.
1180 –
1183 is the immediate overhead focus for the SPX (1174.07) and then it is
1167
on the downside, followed by 1160 – 1163. The QQQQs has initial resistance
at
37.90 – 38 having closed at 37.15. 36.80 – 36.50 remains the key price zone
below.
Have a good trading day,
Kevin Haggerty
MOMENTUM COMPOSITEÂ
(1/24/05)
| OIH | 131 |
| TLT | 101 |
| XLE | 84 |
| XLU | 58 |
| XLP | 14 |
Â
| CMR | -9 |
| RTH | -45 |
| XBD | -52 |
| XLV | -52 |
| XAU | -57 |
| IWM | -69 |
| XLF | -73 |
| SPY | -75 |
| DIA | -87 |
| XLB | -92 |
| BBH | -94 |
| CYC | -109 |
| SMH | -121 |
| XLI | -136 |
| QQQQ | -149 |
| XLK | -169 |
