Don’t Chase Moonbeams
The
(
SPX |
Quote |
Chart |
News |
PowerRating)
has penetrated the 50-day EMA
the past two sessions and has been beaten back to close below the 1218.90 EMA both
days. The rally is going into the seventh day of the short-term three- to
eight-day pullback zone and the Generals have expended some chips during this
end-of-the-month/first-few-days-of-new-month zone. The end-of-month for their
portfolio jockeying and then a few days of new money put to work.
A couple of guidelines that
prevent you from buying into emotion are: 1) don’t buy up into moving averages,
or 2) after three straight Changes in Direction days. If any move is to be sustained,
there will be a pullback-and-go opportunity. A current example of this is the
Semiconductors
(
SOX |
Quote |
Chart |
News |
PowerRating), where the SOX had a reversal day, then five straight
up days with higher lows and higher highs. The SOX has advanced 22% low to high
during this six-day stretch, and the index is now trading up into its 200-day
EMA of 661, closing last night at 637, just 3.8% shy of the EMA.
The Generals have jumped
into the Semis again as evidenced by the significant volume increase in this
group. But I must point out that this is the fourth rally attempt since May 14,
which was the first pullback after the April-lows rally. To me, that means buyer
beware and daytraders be all over your intraday charts for short opportunities
starting today. If there is more price persistence today and tomorrow, you can
take the intraday continuation long entry, but also play any short reversal at
significant levels, like a 1-2-3 after any good run-up. Stocks like
(
KLAC |
Quote |
Chart |
News |
PowerRating)
have outperformed the SOX index, and it is up over 25% in the last six days and
31% since a key reversal day on significant volume at the 200-day EMA on July
17. Yesterday was another
significant up-volume day, as it is now up against its trendline from the May 22
high. If you missed it out of the excellent setup at the 200-day EMA, then let
it go, and wait for the pullback-and-go opportunity if that’s how it plays out.
Don’t chase moonbeams.
You were able to take
money from the Energy group for the second day in succession. I hope most of you
took the shorts from yesterday’s text, like
(
SLB |
Quote |
Chart |
News |
PowerRating) and
(
APA |
Quote |
Chart |
News |
PowerRating).
(
IDPH |
Quote |
Chart |
News |
PowerRating)
from my short list yesterday also rang the register. It’s always good to catch
it both ways as it was hard to miss in the Semis yesterday from the long
side.Â
The Nasdaq certainly had
much better dynamics than the S&P 500 yesterday, trading 1.8 billion shares,
but a volume ratio of 81 and +653 advances over declines. The NYSE gave us a
tired red flag warning as it traded 1.3 billion shares, which is slightly more
than its average volume, but it had 661 million up and 631 million down for a
volume ratio of only 51. Needless to say, it’s better for the retail psyche, and
everyone’s for that matter, when the tech wreck puts in a few good days in
succession, but don’t throw away the crutches yet.Â
The
(
NDX |
Quote |
Chart |
News |
PowerRating) closed at
1730 with the 50-day EMA at 1744 and the
(
SPX |
Quote |
Chart |
News |
PowerRating) at 1216 with the 50-day EMA
at 1219. There is some airpocket short space after this run-up.
(September
|
||
Fair Value
|
Buy
|
Sell
|
3.95
|
5.15 |
2.75
|
Stocks
Today
Congrats to any of you
who took the
(
CBE |
Quote |
Chart |
News |
PowerRating) trade from Tuesday’s text above 40.78 and kept it
overnight as you caught the deal announcement yesterday with a gap open at
51.50, closing at 52.90.
Stocks today on the long
side that set up on the daily charts
(
BAX |
Quote |
Chart |
News |
PowerRating),
(
YUM |
Quote |
Chart |
News |
PowerRating),
(
MBI |
Quote |
Chart |
News |
PowerRating),
(
MTG |
Quote |
Chart |
News |
PowerRating),
(
BGP |
Quote |
Chart |
News |
PowerRating),
(
BSC |
Quote |
Chart |
News |
PowerRating),
(
LEH |
Quote |
Chart |
News |
PowerRating),
(
STI |
Quote |
Chart |
News |
PowerRating),
(
GD |
Quote |
Chart |
News |
PowerRating),
(
VZ |
Quote |
Chart |
News |
PowerRating), and of course,
also the Semis, they’re green here early with the Nasdaq futures up. If you get
continuation long entries, take the second entry. And also, look for any short
opportunities during the day after any run-up.Â
Other stocks on the short
side, look for
(
UNH |
Quote |
Chart |
News |
PowerRating),
(
PDLI |
Quote |
Chart |
News |
PowerRating) and
(
IDPH |
Quote |
Chart |
News |
PowerRating). And also, stay in the
Energies, like
(
APC |
Quote |
Chart |
News |
PowerRating),
(
APA |
Quote |
Chart |
News |
PowerRating),
(
SLB |
Quote |
Chart |
News |
PowerRating),
(
HAL |
Quote |
Chart |
News |
PowerRating) and
(
NBR |
Quote |
Chart |
News |
PowerRating) for any
kind of continuation short moves.
For you specs on the long
side, take a look at
(
COMS |
Quote |
Chart |
News |
PowerRating).
Have a good trading day.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS
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