Energy Stock Focus Again Today
What Monday’s Action Tells
You
The market action was concentrated yesterday
with
the volume ratio at 70, yet breadth was only +196. NYSE volume was 1.44
billion
shares as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating), 1206.83, was +0.6% and the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
10,805, +0.3%. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) and
(
QQQQ |
Quote |
Chart |
News |
PowerRating), 37.34, were each
+0.5%. Yesterday was the 34th day off the 01/24 low where the current rally
started, and the
(
SPY |
Quote |
Chart |
News |
PowerRating)/SPX is in the bottom of its trend channel and
50-day
EMA zone, so any initial reflex was not a surprise. Coming into yesterday,
the 4
MA of the volume ratio was 34 and breadth -1056 after Friday’s market action
which put it into the short-term oversold zone. This is expiration week, so
continue to expect some erratic trading, but knowing that 118.58 can get
taken
out on an ABC correction, and that is where an RST can form which would set
up a
better quarter-end-mark-up situation for traders to capitalize
on.
In the sectors, it was financials and energy
with
the
(
OIH |
Quote |
Chart |
News |
PowerRating) +1.1%, BKX +1.0%, XLU +1.5% and
(
TLT |
Quote |
Chart |
News |
PowerRating) +0.6%. The XLE,
which is
right at its 20-day EMA level, was +0.7% with a significant volume increase
to
10.2 million shares vs. its current 6.3 million share average. This volume
increase was certainly not the case with the SPY at 36.3 million shares vs.
55.4
million average, the
(
DIA |
Quote |
Chart |
News |
PowerRating) 3.4 – 5.7 and QQQQ 71.6 vs. 94.1.
Many of the “Above the Line” energy
stocks with
good daily chart retracement setups to their 20- or 50-day EMAs are a
primary
focus today if the “game is on.” You don’t think it is about pro
forma earnings,
do you, where companies can include or exclude whatever they want? Congress
should be more concerned with the legal accounting fraud and deception that
screws investors every day rather than the seven or eight baseball players.
I
gave up keeping track of discontinued operations of divisions that companies
say
they are going to close and know they are bleeding, so they take a one-time
reserve, and like magic, the division disappears from the financial
statements,
and they can then say it beat estimates, but they forgot to tell you that
the
sick division is still there. “Whoops,” it is not closed yet and
still bleeding.
Net net, most brokerage analysts, and certainly the media, hype the
“beat the
estimate by a penny” drum and the cycle continues.
The SPX, which closed at 1206.83 hits some
immediate overhead resistance at 1212 – 1213 and the SPY 121.40 –
121.50.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.
