Emotions And Reaction To News Is A Trader’s Most Valuable Asset
What Wednesday’s Action Tells
You
It was a power day for the Generals as they
put
new December money to work, accelerated by an over 7.0% drop in oil prices
and
some positive economic reports. (I guess the media forgot about the Consumer
Confidence doomsday hype from yesterday.) The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at
1191.37, taking out the previous rally high of 1188.46 on 11/17. This
breakout
came on the 13th day out of the trading range. 1191 is the 1.272 Fib
extension
of the 954 – 989 SPX retracement leg for the October 2002 769 low. It is
also a
Natural Square and Corner number. There are some other sequence numbers
through
1195, and this resistance zone has, so far, put a lid on the SPX for the
past 12
days, but maybe the Generals can push through it with the new December
money.
I would have to go pretty far back to find a
similar day with the SPX and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) both +1.5%, Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +2.0% and
(
QQQQ |
Quote |
Chart |
News |
PowerRating) +2.1%, all supported by NYSE volume of
1.77 billion shares, volume ratio 79 and breadth +1310.
The primary sectors were up across the board,
led
by the
(
SMH |
Quote |
Chart |
News |
PowerRating), +3.8%, and the only sector that didn’t outperform the SPX
was
the RTH (retail) at +1.4%. The
(
OIH |
Quote |
Chart |
News |
PowerRating) was obviously red at -4.0% with the
big
drop in oil prices.
The market dynamics were strong all day with
the
up volume/down volume ratio never really below 3.8:1, kept on 15-minute
intervals. Breadth was above +1000 all day and TRIN was essentially below
.60
for the entire session, which is very positive.
The 2.0 volatility band for the SPX was
1188.34,
and this was a lid on price from 10:45 a.m. ET until the mark-up in the last
hour to the 1191.37 close.
For Active
Traders
Even though the major indices gapped and
didn’t
retrace, there were many individual focus stock trade-through entries, like
(
SYMC |
Quote |
Chart |
News |
PowerRating), +2.8%,
(
MRVL |
Quote |
Chart |
News |
PowerRating), +3.3%, and
(
UTX |
Quote |
Chart |
News |
PowerRating), +2.6%, just to name a
few. The best HOLDR trade was the SMH First Consolidation Breakout to New
Intraday Highs above 33, which was also a 20-day EMA re-cross, in addition
to
the 240 EMA (five-minute chart).
Inner Circle traders jumped on board. The SMH
finished +3.8% and ran +2.3% from entry.
Today’s
Action
Yesterday was a busy day with a trading-range
breakout to new rally highs for the SPX, a sharp decrease in oil prices and
positive economic reports. This accelerated price as the Generals put some
new
December money to work. There was no intraday retracement, so the Generals
had
to scramble.
The SMH closed at 33.77 after having declined
from a 34.85 rally high just eight trading days ago. The acceleration or
resistance levels today are the 200-day EMA at 33.81 and 233-day EMA at
34.02.
We’ll find out really soon what the Generals want to do with the
semiconductors.
Yesterday’s SMH volume of 19.4 million was light relative to the price
advance.
The energy stocks have been a goldmine for
traders over the past two to three weeks, prior to the OIH 87.93 high last
Friday. The OIH has declined three days so far from the high, closing at
82.70,
with the 20-day EMA at 83.13. The 50-day EMA is 81.11, with the 89-day EMA
at
78.88. Any further decline will set up long side retracement plays once
again.
In the major indices today, the Nasdaq closed
at
2138, so we could get an acceleration of price in the market with the Nasdaq
going through 2154, which puts it to new highs.
Have a good trading day,
Kevin Haggerty