Fire Drill
You
know it’s not a good day when
the only stock on the 3-Day Wake Up Call is Newmont Mining (+6.4%) and on the
Change in Direction screen it’s ABX (+5.9%). That’s a first for me — seeing two
gold stocks and nothing else. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was
sideways until the 1:33 PMÂ to 1:45 PM intraday program time and the index
lost 18 of its 24 points as the sell programs hit the tape.
Sorry to break your
bubble but the institutions didn’t line up to sell because they didn’t like
Bush’s speech. When a tape is fragile — as it was yesterday — the program gang
can easily leg into a trade from the short side and vice versa, if greed is
high. There is so much after-the-fact regulatory CYA action by political sleaze
that it has become a fire drill. As another attempt is now being made to fix the
same problems they have known about for years, such as quality of accounting, IPO, insider trading and
analyst abuses, employees being made to buy their company’s stock in their 401Ks
which every administration has ignored since 401Ks started.
If what is a crime is
defined and white-collar criminals are jailed the same as other criminals,
things would get cleaner very quickly. The biggest road block is the politicians
themselves who are involved deeper and dirtier than all but the most fraudulent
corporations. If we end up with another glut of regulatory agencies, Big Brother
will be that much closer.
Yesterday’s market apathy
had yesterday’s NYSE volume at 1.35 billion, volume ratio at 19 and breadth
-694. Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) volume was 1.7 million with a volume ratio
of 24. The Dow
(
$DJX.X |
Quote |
Chart |
News |
PowerRating) lost 1.9%, S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
-2.5%, Nasdaq -1.7% and NDX 100
(
NDX |
Quote |
Chart |
News |
PowerRating) -2.4%.
Sectors were red across
the board except gold with the XAU +7.5%. The SOX slid -3.6% to 362.69 and has
now given back more than 50% of its 15.3% two-day gain, low to high. If the
major indices are going to hold last week’s lows for any length of time, we will
get some upside opportunity this week as the major indices have retraced more
than 50% of this reflex. That doesn’t mean we won’t take the intraday
continuation shorts from a defined pattern below all the lines, like the SPX
yesterday below 970 from a flag that put it below all of its 20-, 60- and
260-EMAs on the 5-minute chart.
Letting the
TradingMarkets.com StockScanner scan for all stocks equal or greater than 20, a
daily volume of 400,000 shares or more, a +DMI and also above its 20, 50 and
200-day MAs, and I included Nasdaq and the NYSE, I got just 40 stocks, so that
sums up why it’s an intraday scrolling game both long and short, with no
overnight positions unless it’s the proxies or HOLDRs.
Try to focus on those
stocks that have at least a 2 point daily range and keep scrolling for the
defined setups. I have seen nothing that changes my mind that the major indices
will trade lower into the Fall.
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