Full Moon
The
markets gave us the early down yesterday and
there were gap openings, but there were some second-entry trade-through shorts
in several of the semis mentioned yesterday. The contra rally started on a 10:45
a.m. bar for the NDX
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) which was an outside-reversal bar with a
top-of-the-range close and also reversing the previous high and two closes.
Entry was above the high of this bar. If you were trading the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s, it was
a Kings and Queens setup pattern with a positive divergence in the 8(3)3
stochastic on your five-minute chart. The QQQs rallied from the 1.5 volatility
zone, which was 32.62 vs. the 32.84 low. They rallied to a 34.09 high before
dropping off to close at 33.38.Â
The intraday low on the
NDX was 1320 vs. its .38 retracement of 1335. It had retraced to the 1320 low
into the close, and we start today with a bullish setup on your five-minute
chart. The Dow hit a low of 9066 vs. the .38 retracement of 9014, while the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) hit 1054 vs. its .38 level of 1048.
I would rather see an
overreaction this morning to the economic fraud numbers and then look to play a
stronger contra rally making up some of the two-and-a-half-day decline. The
(
OIH |
Quote |
Chart |
News |
PowerRating)s had a good downside move yesterday, with the
(
$OSX.X |
Quote |
Chart |
News |
PowerRating) closing
-5.3% on the day. But we didn’t get any trade-through short entry because the
HOLDRs, as you know, are opened after the components, which were all red with no
contra rally to give us a second-entry short. The OIHs traded in a Slim Jim from
10:00 a.m. until the close between 58.03 and 59.10 which sets up a potential
trade today.
Monday’s down day was on
slightly less-than-average volume for the NYSE, but it picked up yesterday to
1.3 billion, a volume ratio of just 17, and breadth more negative at -1178. Both
the SPX and Dow closed down about 1.7%, with the NDX -2.4%. If we are to have a
positive November-May, then the semis and banks must be leaders. Right now, the
semis are providing the most action both ways.
Stocks
Today
Yesterday’s down was on
more volume, in addition to slightly more negative breadth and volume ratio, yet
the price decline was less. This makes me anticipate a tradable long move today.
Start with the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s,
(
SPY |
Quote |
Chart |
News |
PowerRating)s and
(
DIA |
Quote |
Chart |
News |
PowerRating)s if they break to the upside from their
current flags. The better long trade will probably be the
(
SMH |
Quote |
Chart |
News |
PowerRating)s, which
closed in a confirmed intraday RST, with the low of the setup bar being 33.90,
which also gives you a downside pivot if we were to head south. They closed at
34.22.
Similar patterns to the
SMHs are
(
KLAC |
Quote |
Chart |
News |
PowerRating),
(
NVLS |
Quote |
Chart |
News |
PowerRating),
(
TXN |
Quote |
Chart |
News |
PowerRating) and
(
ISIL |
Quote |
Chart |
News |
PowerRating). Another semi that
you must be involved in is
(
GNSS |
Quote |
Chart |
News |
PowerRating), which has been the best of the bunch.
It’s now in a three-bar pullback from the highs with a close above the
mid-point.
Any rally today will see
some of the techs, like
(
CIEN |
Quote |
Chart |
News |
PowerRating),
(
JNPR |
Quote |
Chart |
News |
PowerRating),
(
VRSN |
Quote |
Chart |
News |
PowerRating) and
(
VRTS |
Quote |
Chart |
News |
PowerRating)
provide good opportunity.
In the biotechs, if we go
green,
(
GENZ |
Quote |
Chart |
News |
PowerRating),
(
ICOS |
Quote |
Chart |
News |
PowerRating),
(
IDPH |
Quote |
Chart |
News |
PowerRating) and
(
PDLI |
Quote |
Chart |
News |
PowerRating). They’ll get it
done for you.
Have a good trading day,
and enjoy the full moon.
Five-minute chart of
Tuesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Tuesday’s NYSE TICKS
Do you have a
follow-up question about something in this column or other questions about
trading stocks, futures, options or funds? Let our expert contributors provide
answers in the TradingMarkets Trading Advisor! E-mail your question to questions@tradingmarkets.com.
For the latest answers to subscriber questions, check out the Q&A section,
linked at the bottom-right section of the TradingMarkets.com home page.