Extended Profit Opportunities
What Tuesday’s Action Tells
You
NYSE volume expanded to 1.44 billion shares,
as
all of the major indices advanced, led by the
(
QQQ |
Quote |
Chart |
News |
PowerRating) at +2.4%. At 4:00
p.m.
ET, the QQQs were 35.23, then were taken up to 35.58 with 3.7 million shares
on
the 4:05 p.m. bar, followed by 2.9 million shares on the next bar and
closing at
35.43. The same thing occurred with the
(
SPY |
Quote |
Chart |
News |
PowerRating) which was taken from
111.26 to
111.90, but on lighter volume. 506 million shares took price from 111.26 to
111.80, then to 111.90 on the next bar with 1.1 million shares, closing at
111.64, +1.3%, vs. SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) cash index which closed at 1108.67
and
+0.7%.
On the day, the SPY volume expanded to 47.3
million shares vs. its current average of about 35.9 million. The QQQ traded
120.2 million shares vs. a 91.4 million average. The
(
DIA |
Quote |
Chart |
News |
PowerRating), which traded
up
to 102.15 from the 101.62 4:00 p.m. price, closed at 101.90, +0.9%, vs. the
Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) at 4:00 p.m. of +0.5%. The DIA volume was right on its current
5.4
million average. What the agenda was doesn’t matter. It’s the result today
that
we care about. However, it did increase the profit cushion for those that
carried over SPY or DIA from the price action zone on the re-cross of the
200-day EMAs, and you can now move to above breakeven on the
stops.
In the sectors, the semis had a green day
with
the
(
SMH |
Quote |
Chart |
News |
PowerRating) +2.2% to 32.90 after hitting a 33 intraday high after bouncing
off
the .50 retracement level to the October 2002 17.32 low with a 31.76 low on
Monday. Keep those stops above breakeven at about 32.30. The SMH had the
most
significant increase in volume yesterday, trading 26.2 million shares vs.
the
17.8 million average. This follows Monday’s doji-bar day volume of 22.5
million.
These two days had the most up volume since 06/22 when the SMHs rallied from
35.63 to 38.05, the retracement to its 200-day EMA.
The biggest up yesterday was the brokers,
with
the XBD +4.4% and with the exception of the PPH at -208.44 on my composite,
the
XBD was the second-most oversold at -176.67. Rounding out the bottom five
were
the XLV -169.97, SMH -147.16 and Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating), +1.7% yesterday at
-145.40. The QQQ was right behind at -141.74. It is usually very profitable
when
my composite is in sync with a price action zone. You don’t know what the
duration will be, but if there is a profit cushion at day’s end, it is a
short-term position opportunity at worst, and certainly an excellent
daytrading
zone.
The volume ratio improved to 69 yesterday,
along
with the 1.44 billion shares and the 4 MA of the volume ratio now 48.
Breadth
was positive again at +601 with the 4 MA at +310 and has been positive seven
of
the last eight days as the major indices have declined in price.
For Active
Traders
The 1,2,3 higher bottom SPY entry above
110.47
(4:10 p.m. bar on Monday) with a low and stop below 110.24 turned into a
trend
up day with a final close at 111.64. If you kept the position, your trailing
stop is now above breakeven and just below 111. You can always re-enter a
trade
if you get stopped out. The 50-day EMA is now 112.41 with the 20-day
trading-range resistance just above at 112.60. The 20-day EMA is 112.03.
This is
obviously the current resistance zone following the range
breakout.
(
GS |
Quote |
Chart |
News |
PowerRating) provided a good RST second entry
(daily
chart) daytrade above 88.13 that traded +1.8% to an 89.70 close from the
entry
level. With the XBD so oversold as you saw in the composite, you had
anticipated
the RST prior to yesterday’s trading. I am always anticipating RSTs/price
action
zones with the sectors in the top and bottom of my composite as they are
obviously the most overbought and oversold. For those of you familiar with
the
RST, I have labeled the points on today’s chart.
Today’s
Action
The immediate upside resistance focus zone
for
the QQQ is 35.80 – 36, which is the 20- and 50-day EMAs, while below the
35.43
close is the 200-day EMA of 35.23. The 816 EMA is 35.44 (34 EMA on
120-minute
chart). For the SPY, the 20-day EMA is 112.03 and the 50-day EMA 112.41,
along
with the previously mentioned range resistance. Just below is the 816 EMA of
111.50 and 480 EMA of 111.14. You, of course, tie in today’s volatility
bands to
these levels if there is some confluence.
The
(
INTC |
Quote |
Chart |
News |
PowerRating) trade that was kept as a 50%
gap
pullback is up to 24.92 and +8.6% from the 22.95 entry vs. a stop just below
the
22.65 low of only -1.3%.
Have a good trading day,
Kevin Haggerty
