Daytraders Excel With The Relative Performance Stocks
What Friday’s Action Tells
You
The market action was driven by the
expiration
and rebalancing as NYSE volume ballooned to 2.34 billions shares with a
volume
ratio of 40 and breadth -848. As a daytrader, you just have to get out of
the
way regarding the major indices and stay with some individual stock setups.
It
didn’t help that the last two Mondays following March expirations have been
down
significantly. In 2003, the DIAs closed on Friday at 82.20, opened
Monday
at 80.58 and hit an intraday low of 79.06. In 2004, there was a close at
100.47,
open at 99.84 with a low of 98.74. The short-term trader was not going home
loaded up in front of that scenario, except any option strategy you might
have
had on. However, the RST short entry below 109.30 on 03/08 with the stop
above
109.83 was completely covered on Friday in anticipation of the next RST buy
entry. The
(
SPY |
Quote |
Chart |
News |
PowerRating) RST short entry was below 122.40 on 03/08 and taken
100%
off on Friday when the SPY made a 118.15 low, closing at 118.54.
As I always say on expiration:Â the
sector
action on Friday was not relevant, and it is all about where the major
indices
are starting the week. Both the DIA and SPY closed at their 89-day EMAs
which
are 118.70 for the SPY and 106.02 for the DIA which closed at 105.96 on the
most
significant volume of all the index proxies. The 4 MA of the volume ratio is
now
38 and breadth -724. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) 5 RSI is -30 and the
CMO(15) -25.
The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) is a bit more short-term oversold with the 5 RSI of
the
DIA at 20 and CMO(15) -31. Both have declined -4.0% or so high-to-low.
For
sequence traders, you should see that the
SPY
20-day/30-minute is extended to the -2.0 band with the three-month -2.0 band
about 117.50 vs. the 118.15 Friday low. Therefore, the bias is now to the
buy
side, especially on any Monday weakness. The DIAs are in the same extended
position. The
(
QQQQ |
Quote |
Chart |
News |
PowerRating) is similar on the shorter term, but has more
downside
on the three-month period. More significant for the QQQQ is that the 36.51
Friday close puts it below its 12-month moving average of 36.68 in this
third
month down from its 40.68 high in December 2004. That is the immediate
upside
focus. The .236 retracement to the October 2002 low is 35.74 and the .50
retracement to the August 2004 32.35 low is 36.51, which is also Friday’s
close.
The .618 retracement is 35.53 in confluence with the 35.74 .236 retracement,
so
we have another key price zone below and an immediate focus above. You can’t
predict the future, but you can identify high-probability zones, which is
your
edge.
The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed at 2007.79
with
the 12-month EMA and SMAs at 1999.28 and 1995.54. The Nasdaq Composite is
way
overdone as anything other than a retail speculation barometer. This is
because
about 75% of the Nasdaq volume is in the NDX 100 stocks. Remember, it is an
institutional and hedge fund game, period, so the other indices have much
more
meaning to me, as does the
(
IWM |
Quote |
Chart |
News |
PowerRating), the Russell 2000.
For daytraders, there are many focus-list
stocks
that remain above their 10- and 20-day EMAs and continue to provide many
opportunities, in spite of the major indices nine-day decline. Most of these
stocks are in the energies, basic materials, industrials and brokers. Check
your
daily charts for the best setups.
Inner Circle members will get a list of
these
stocks on Sunday.
This was recorded Sunday for
Monday.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.
Â