Contra Day
So
much for the Hussein Hustle, as
the early overreaction produced the contra trade you were prepared for. The SPX
(
$SPX.X |
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PowerRating), after a big green pre-opening futures, gapped up to the Fib
extension zone mentioned in yesterday’s
commentary. There was a technical problem on the floor that created a lot of
the artificial up openings by the specialists at 9:30 a.m. ET, before many of
the brokers could get out to the posts because of moments of silence imposed by
the Exchange.Â
The intraday high of
902.68 came on the 9:35 a.m. ET bar. (See your five-minute chart.) Then the 9:40
a.m. ET bar was a Change in Direction bar with a lower high and low and a close
in the bottom of the range. The first short entry was below the 899.30 low of
the 9:40 a.m. ET bar. The next entry was to new intraday lows below 893. Funny
how that .38 retracement from 965 – 776 keeps coming into play both ways, along
with the other awareness levels. Hint.
The SPX went sideways
from 12:30 p.m. to 3:00 p.m. ET in an 884 – 880 Slim Jim. This was taken out
just after 3:00 p.m. ET as the SPX traded down to an 872.38 intraday low,
closing at 873.52, or -2.0% for the day. The major indices were carbon copies on
the day.Â
The SPX should break the
870 low to follow suit with the Dow
(
$INDU |
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PowerRating) and Nasdaq Composite
(
$COMPQ |
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PowerRating), which have already broken their .50 retracement levels. The
(
QQQ |
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PowerRating)s will break below 22, which is the neckline of a daily chart
head-and-shoulders pattern, while the
(
SMH |
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PowerRating)s did so yesterday to new bear
market lows. For the SPX, there is
a confluence of numbers between 855 – 845 and a stronger one around the 825 –
830 zone. A little downside carry through, and the major indices and SMHs are
entering longer-term band levels.
The
(
PPH |
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News |
PowerRating) hit our key
zone mentioned in prior commentary for a head-and-shoulders short entry below
71.25. They closed at 71.10 yesterday on a wide-range outside reversal bar, but
on low relative volume, so stay intraday with any short unless you go home with
a cushion profit.Â
The
(
BBH |
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Chart |
News |
PowerRating)s are also
close to breaking a head-and-shoulders pattern to the downside. Early entry is
below yesterday’s low of 80.60. Only take trade-through entries on anything you
daytrade, and second entry is better following wide-range-bar down days like
yesterday.Â
The Nasdaq closed at 1260
and accelerates below 1250 and again below 1200. This could happen as the
Generals continue to blow out the tech dogs into quarter’s end, along with
possible redemptions.
Sequence daytrading
thrives in volatility because we don’t care which way the market goes and are
not slaves to every piece of news and Program Gang action. We react to the
overreactions.
You have your awareness
levels for today, and also check today’s volatility bands for the indices,
HOLDRs and major option stocks. The stock bands are a goldmine if you work them
every day. I see big early red in the futures, so hopefully we’ll get a pretty
good gap down opening and get a chance to play. I had a crash in my computer
hard drive, I lost a lot of e-mails, many of which I had not answered yet. I’m
now back up and running on another couple of computers with the same Internet
address. So, I can’t retrieve them, so if you want to resend, please do. If not,
I’ll respond whenever I get them.
Have a good trading day.
Five-minute chart of
Tuesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Tuesday’s NYSE TICKS