Drift
The
SPX traded down to 909.51 yesterday by 10:15 a.m. ET
vs. the .50 retracement to 872.05 which
is 913.16 and the .618 retracement at 903.46. There was a quick Trap Door inside
bar pattern that initiated the first contra move up that ran to 918.82 before
falling off to form a 1,2,3 higher bottom setup. This trade ran to 925.25, then
fell off into the close at 917.48. Love those early futures selloffs. The 1,2,3
higher bottom entry was on another re-cross of the 20-day EMA to the upside
after the first down, up, down, up, down, then the last re-cross up on the 1,2,3
entry. The defined pattern proved to be the better trade of the day for the SPX,
and this was, of course, mirrored by many of the big cap stocks that have a high
correlation to the SPX. Yesterday’s low satisfied the .236 retracement to the
768.63 Oct. 10 low. Progress.
Depending on how the
early green futures play out, the
(
SMH |
Quote |
Chart |
News |
PowerRating)s should provide opportunity after
yesterday’s gap down on the opening. The previous day’s close was 27.94, and the
SMHs opened at 26.73 and traded down to the intraday low of 26.06 by the 10:15
a.m. bar. That was the largest volume of the day on the downside as the SMHs
went sideways until the 2:30 p.m. time zone where they rallied almost a point
before closing at 26.45. The 20-day EMA becomes a possible upside pivot, or
downside if it re-crosses it, at 26.86. The .38 retracement to 17.32 is 25.77,
the .50 is 24.16, and the .618 is 22.25. So far it’s been a nice 16% drop from
the awareness zone, and the SMHs will most likely retrace some more, so be ready
to play intraday both ways, especially on any retracement back up to the 31.00
zone.
The SPX closed down for
the fourth straight day, penetrated the 20-day EMA to the downside, and closed
just above it on a re-cross, so it is now the closest pivot.
There are minor cycle
dates today and Dec. 11, leading into the stronger dates between 12/17 and
12/20. The first SPX magnet below which will get hit is the 89-day EMA at 906.92
and the 50-day EMA now at 899.06. The SMHs will probably get a quick reflex
trade from the 25.25 to 25.85 zone, which is the 50-day and 89-day EMAs.
So far, the major indices
have drifted off, not sold off. Yesterday, NYSE volume was 1.5 billion, a volume
ratio of 36, and breadth -115. Research analysts continue to waffle back and
forth and are paranoid about announcing anything they think might be negative,
including playing technical analyst with timing. This will be the norm for the
near future. Options strategies are the only sensible way to carry stock
positions for any length of time in order to survive in the increased level of
volatility the brokerage firms have created, not to mention the way the
corporate guidance farce is playing out. Daytraders don’t have that problem,
provided you go out flat at night.
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