Fast Forward Movie
With
all that’s going on, it’s like an old Western movie
on fast forward. You can’t tell who is
winning. Friday was show time at the casino and Monday was a small hangover from
the party, while today is probably a “Guess Who’s Coming To Dinner?” — because
no one knows.
The one fact is that the
reflex came from the 2.0 longer-term standard deviation band which I outlined
for the July 3 and July 5 commentaries before the gang hit the casino on Friday.
Things happen around key inflection points most of the time and traders must be
ready to react. It is an understatement to say it’s a daytrader’s market, but
intraday travel range is bizarre and provides you with many trading
opportunities.
New York Stock Exchange volume yesterday
was less than average at 1.17 billion; volume ratio of 28 and breadth -567. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
ended at 976.98 or -1.2%; the Dow
(
$DJX.X |
Quote |
Chart |
News |
PowerRating) was off 1.1%, closing
at 9274.90. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) volume was just below average at
1.7 billion, volume ratio of just 15 and breadth -873.
The initial resistance
for the Nasdaq was a down trendline at approximately 1450 and yesterday’s high
was 1452. The next target if the reflex from the bands carries further is
resistance at about 1550 and then the larger trendline resistance at 1600-1625.
That’s a 7%-10% move depending on which level.
After Friday’s party, the
bottom line is that the SPX, DJX, COMP and NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) all hit the wall at the 20-day EMAs, then selling off yesterday.
For the SPX, looking at the 5-minute chart, I see the 260-EMA at 973 and
yesterday’s low at 972.91. The .38 retracement of the July 3 low is 971.25. Any
break below this zone and I look to the .50 retracement at 964; .618 at 957. On
the upside, above 978 puts the SPX above all of its 8-, 2-, 60- and 260-EMAs but
with the down trendline from yesterday’s high at about 980.50.
I don’t care which way
they take it, but I am prepared in advance to react both ways at the levels. If
you take the trade, you have bought your ticket to the game and that’s the way
you can participate in any air pocket move. It’s certainly not productive to
predetermine what should be or what might happen, because that’s when you freeze
and do nothing.
Do the same exercise with
the other major indices and HOLDRs, especially SMHs which have a beta of about
two times the SPX. This reflex off the exact 2.0 longer-term band of 345 for
the SOX, +17.3% low to high in the SMHs while the SPYs moved +6.2% from 93.73 to
99.54. The SMHs ran fro 27.10 to 31.80, closing at 30.05 yesterday. Make sure
you are aware of the retracement levels to the 27.10 low.
The OIHs have an
interesting pattern at the 200-SMA which needs a trade-through entry above 60.25
to activate it. Until the Generals give us some stock direction more than the
beach ball action we’ve had, stay with the indices, proxies and HOLDRs.
Have a good trading day.
Five-minute chart of
yesterday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
yesterday’s NYSE TICKS