Favor The Long Side On Any Early Weakness
What Tuesday’s Action Tells
You
It was gap up yesterday for the major indices
into the 9:45 a.m. ET bar, and then the SPX
(
$SPX.X |
Quote |
Chart |
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PowerRating) reversed at the
120
EMA (five-minute chart) on the first intraday high of 1101.52, then went
trend
down to 1091.57. The afternoon trend was up to an 1100.41 high, and sell
programs hit the floor in the last 20 minutes, as the SPX closed at 1093.95,
minus just 1.5 points on the day. The Dow
(
$INDU |
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Chart |
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point,
while the Nasdaq
(
$COMPQ |
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(
QQQ |
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PowerRating)s -0.8%.
Despite the late decline, the volume ratio was
slightly positive at 52 and breadth +467. NYSE volume was on its average at
1.44 billion. The market action was certainly choppy with the overload of current
world events and the after-the-fact politicians, but that will pass. There was
over $70 billion of net in-flow in the mutual funds in January and February,
and these stock jockeys will be back to buy some weakness after they cease-and-desist
on selling some of their recent losers and then put some money into their better-acting
major holdings.
End-of-quarters provide lots of opportunities for
daytraders, so you might be able to make your month from now through early April,
and then you have the IRA herd that comes in with their 2000 – 3000 bucks.
| size=2> | Wednesday
3/17 |
Thursday
3/18 |
Friday
3/19 |
Monday
3/22 |
Tuesday
3/23 |
| color=#0000ff>Index | |||||
| color=#0000ff>SPX | |||||
| color=#0000ff>High | 1125.76 | 1125.50 | 1122.72 | 1109.78 | 1101.52 |
| color=#0000ff>Low | 1110.70 | 1113.25 | 1109.69 | 1089.49 | 1091.57 |
| color=#0000ff>Close | 1123.78 | 1122.31 | 1109.74 | 1095.44 | 1093.90 |
| color=#0000ff>% | +1.2 | -0.1 | -1.1 | -1.3 | -0.1 |
| color=#0000ff>Range | 15.1 | 12.2 | 13 | 20.3 | 10 |
| color=#0000ff>% Range | 87 | 74 | 0 | 29 | 23 |
| color=#0000ff>INDU | 10300 | 10296 | 10187 | 10065 | 10064 |
| color=#0000ff>% | +1.1 | -.04 | -1.1 | -1.2 | -.01 |
| color=#0000ff>Nasdaq | 1977 | 1962 | 1940 | 1910 | 1902 |
| color=#0000ff>% | +1.7 | -0.7 | -1.1 | -1.6 | -0.4 |
| color=#0000ff>QQQ | 35.52 | 35.33 | 34.73 | 34.32 | 34.02 |
| color=#0000ff>% | +1.6 | -0.5 | -1.7 | -1.2 | -0.8 |
| color=#0000ff>NYSE | |||||
| color=#0000ff>T. VOL | 1.50 | 1.36 | 1.44 | 1.45 | 1.44 |
| color=#0000ff>U. VOL | 1.20 | 578 | 340 | 116 | 737 |
| color=#0000ff>D. VOL | 251 | 760 | 1.07 | 1.32 | 679 |
| color=#0000ff>VR | 83 | 43 | 24 | 8 | 52 |
| color=#0000ff>4 MA | 62 | 51 | 54 | 39 | 32 |
| color=#0000ff>5 RSI | 50 | 48 | 26 | 26 | 25 |
| color=#0000ff>ADV | 2553 | 1462 | 1250 | 750 | 1866 |
| color=#0000ff>DEC | 784 | 1824 | 2002 | 2557 | 1399 |
| color=#0000ff>A-D | +1769 | -362 | -752 | -1807 | +467 |
| color=#0000ff>4 MA | +579 | +98 | +307 | -288 | -613 |
| color=#0000ff>SECTORS | |||||
| color=#0000ff>SMH | +1.6 | -1.4 | -3.6 | -0.7 | -0.2 |
| color=#0000ff>BKX | +1.2 | -.09 | -1.4 | -1.2 | -.05 |
| color=#0000ff>XBD | +2.1 | -0.7 | -1.4 | -2.4 | -0.1 |
| color=#0000ff>RTH | +1.3 | +0.5 | -0.8 | -1.5 | -0.3 |
| color=#0000ff>CYC | +2.0 | -0.3 | -0.9 | -2.0 | +0.2 |
| color=#0000ff>PPH | -0.7 | -0.1 | -1.7 | -1.0 | +0.6 |
| color=#0000ff>OIH | +3.2 | +0.8 | -2.5 | -1.6 | -1.4 |
| color=#0000ff>BBH | +2.6 | -0.2 | -0.7 | -2.2 | -1.9 |
| color=#0000ff>TLT | -0.2 | -0.5 | -0.2 | +0.6 | +0.2 |
| color=#0000ff>XAU | +1.6 | +2.1 | +0.3 | -0.7 | +0.7 |
For Active
Traders
After the gap up openings. there were gap
pullback setups in the major indices which failed about five bars later,
stopping you out, i.e., the QQQs traded up to 36.65, pulled back to the 60
EMA,
then a doji signal bar with entry above 34.42. But then you got stopped out
below 34.36, and the QQQs didn’t get higher than 34.48 after entry. The
follow-through trade caught the afternoon trend up, however, with an RST
long
entry above 34.11, which carried to above 34.50 before the late knife
down.
Unlike the QQQs, the
(
SPY |
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(
DIA |
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didn’t take out Monday’s lows, and the afternoon trend was traded from 1,2,3
higher bottom setups. The
(
SMH |
Quote |
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News |
PowerRating) made a 36.86 double bottom vs. Monday’s
36.86 low and ran to 37.79 and the 240 EMA before closing down at 37.25. On
the
short side, the initial opening reversals caught that morning downtrend
following the 9:45 a.m. highs for the major indices and SMHs.
Today’s
Action
I favor long side setups on any early
weakness
and with five days left in the quarter and then the first few days of April,
any
news-induced selloff favors long side trades. The SPX has been minus for
four
days in a row and down nine of the last 12 days. Today is the 13th day since
the
decline from the 1156.86 03/05 close, so that also gets my long side
interest.
The 4 MA of the volume ratio is now 32, and breadth -613, so it is
short-term
oversold, which means this corner is looking to play long reversals and
continuations in the major indices and SMHs, not selling early
rallies.
On individual stocks into the end of the
quarter,
I will focus on stocks that have had strong relative strength during the
12-day
decline. A few examples are
(
WLP |
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PowerRating),
(
APOL |
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(
UNH |
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(
YUM |
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(
TASR |
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(
PG |
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(
PGR |
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(
OSI |
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(
ONXX |
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(
IGT |
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(
DGX |
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and
(
ATH |
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PowerRating).
Have a good trading day,
Kevin Haggerty
