Focus On Trap Doors
On
Wednesday, 9/11, they got the
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) up to 924, which is the resistance zone I said there would
be good intraday short opportunity in, which it was. Yesterday, it continued down
to an 884.84 intraday low, closing at 886.87. Program trading as a percentage of
NYSE volume remains extremely high, between 35% – 40%, and is the primary factor
in the reflex rallies. The overall volume remains light, which is common in the
larger bottoming process.
Yesterday, NYSE volume
was about 85% of average at 1.2 billion, a volume ratio of 14, and breadth
negative at -1420. The SPX ended -2.1%, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) -2.4%, and Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -2.7%, trading just 70% of its average volume. I also said and
still feel that the SPX .50 retracement level of 870 from 965 – 776 will be
taken out before we get another decent upside reflex.Â
Next week is Triple Witch
and is a key reversal time zone around Sept. 21, which I have mentioned numerous
times. Having said that, at which awareness levels are the highest probability
reversal zones? The first zone I plan for on the SPX comprises the .618
retracement from 965 – 776 of 848, then you have the .236 retracement from 1107
– 776, which is 854, and then 855 which is the second standard deviation band
from a longer-term price line. You can relate these levels to the
(
SPY |
Quote |
Chart |
News |
PowerRating)‘s
corresponding numbers.
Using the SPY as an
example, the second zone is made up of the AB=CD leg starting from 965 on the
SPX of 83.68, the .707 retracement to 776 of 83.38 and a third standard deviation
band at about 83.20. The .786 retracement for the SPX is 816.Â
As we enter the key Sept.
21 time period, things still remain oversold, and will get even more so. The
percentage of NYSE stocks greater than their 200-day moving average is just 36%,
and for the SPX it’s just 20%.
The early red in the
futures has the Dow back down to the .50 retracement zone of 8305, while the
S&P futures reflect about 875 – 880 in the SPX cash index. More volatility
in price is obvious relative to the current time period and news. It certainly
appears that Trap Doors are the initial focus this morning. The probability for
a contra trade today is high, but I expect lower lows next week.
Have a good trading day.
Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Thursday’s NYSE TICKS