Fleece The Lambs
Yesterday,
the SPX
(
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PowerRating) gave you the upside breakout from
the narrow-range triangle above 1034.50 on the 10:10 a.m. bar, but it only ran
to 1040.79 on the 10:50 a.m. bar. It was sideways in a 7 point range for the
remainder of the session, closing at 1037.14. The downside break from a larger
triangle is below 1036, but based on the early red in the futures, there won’t
be any trade-through entry.
The S&Ps are down 14
point as I do this at 7:30 a.m., with the Dow -123, and NDX -43. I would love to
see the audit trail on this morning’s futures selling, but I just remembered
this Friday is option expiration. What a surprise. It’s
not the Generals selling pre-market futures in the no-liquidity casino, which in
turn creates a snowball effect on the opening prices. For specialists, market
makers, and those traders that get in sync with the professionals, big
pre-market moves, then gap openings, is a license to steal. This is where most
of the money is being made in this market. Make sure you check the volatility
bands this morning so you are ready to go on the first reversal pattern or Trap
Door, whether it be proxies or individual stocks.
The SPX gave us two
wide-range bars off the 982 level, then a narrow-range doji yesterday right at
the 20-day EMA. Frame your retracement levels from the 981.63 low to the 1040.83
high, and be alert for setups on the intraday charts, especially in conjunction
with today’s volatility bands. Before I forget, turn your TV off.
NYSE volume was light
yesterday at 1.189 billion, which is about 8% below its average, the volume
ratio yesterday was 54, and breadth was neutral at +97. The Nasdaq traded less
than 90% of its average volume for the second day in succession at 1.56 billion,
had a volume ratio of 44, and breadth -304. Both the SPX and Dow closed slightly
green, while the Nasdaq was -0.7% and the NDX -1.0%.
For today, continuation
setups on the daily chart are not realistic because of the early red and
probable gap-down openings. Scroll the intraday charts after the fleecing of the
lambs for Trap Doors, 1,2,3s, etc.
Have a good trading day.
Five-minute chart of
Tuesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Tuesday’s NYSE TICKS