Focus List Stocks Continue To Provide The Best Opportunities
What Thursday’s Action Tells
You
The market was short-term overbought at the
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) 1196 resistance level from the rally off the 1163.75 low on
01/24/05 and up six of eight days, so any backing off in here should not be
a
surprise. It certainly wasn’t sold off yesterday as NYSE volume was the
lowest
since 01/24 at 1.55 billion shares, with the volume ratio at 40, but breadth
was
only -238. The SPX finished at 1189.89, -0.3%, while the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
was
off 4 points 10,593. Technology and related were weaker with the
(
QQQQ |
Quote |
Chart |
News |
PowerRating)
-1.1% to 37.15 and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -0.8% to 2058.
The sectors were all red except the
(
OIH |
Quote |
Chart |
News |
PowerRating),
+0.5%, after a trend-up rally off the 10:35 a.m. ET 89.16 low to 91 and
closing
at 90.86. Daytraders flourished again in this sector in focus stocks like
(
VLO |
Quote |
Chart |
News |
PowerRating), +3.5%, which gave you an Opening Reversal that ran +4.6% from
entry
above 59 to 61.72. It went Net Plus (above the open and previous close)
above
59.12.
(
SUN |
Quote |
Chart |
News |
PowerRating) also gave us another tradable day with a breakout of the
Slim
Jim (91.20 – 90.70) and ran +2.1% from entry to intraday high with no
pullback
to the entry level whatsoever. Both VLO and SUN are extended, but that is
not a
problem for the daytrader, where long term is after lunch.
The brokers were red for the second day, as
the
XBD was -0.8%. But some brokers have already made new rally highs, like
(
LEH |
Quote |
Chart |
News |
PowerRating) and
(
MWD |
Quote |
Chart |
News |
PowerRating), while
(
MER |
Quote |
Chart |
News |
PowerRating) and
(
GS |
Quote |
Chart |
News |
PowerRating) are just below their
December 2004 highs. The M&A activity has them on the move.
The short-term SPX (SPY) position trade was
entered in the key price zone at the lowest common denominator and has now
retraced to the previous 1196 swing point high, which is also the .618
retracement zone to the 1217.90 SPX rally high. This advance put the 4 MA of
the
volume ratio at 64 on Wednesday’s 1195.25 intraday high, along with the 4 MA
of
breadth of +925.
You can identify high-probability price zones and
then decide, using price action and various tools, whether to take entry, but
once you do, you cannot know the extent or duration of the move. Should the
SPX
trade through 1196, one could expect the next level to be the 1206 zone, but
from a market standpoint, the only one that matters right now is 1217.90
where
Wave 5 can move higher. Your short-term position stops should be just above
breakeven, giving price some room. All entries were made below
1170.
On a daytrading basis, the
focus list stocks
that
have not declined with the SPX and, in fact, made new rally highs, continue
to
provide the best daytrading opportunities, so in addition to the energy
stocks,
the daytrader still has an excellent trading focus list with which to
operate.
Have a good trading day,
Kevin Haggerty
