Get The Highest Probability Trades With The ‘Above The Line’ Method
What Thursday’s Action Tells
You
The 5.5 point decline by the SPX
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in the last hour from 1176.90 to 1171.42 put it at -1.1 points on the day.
The
intraday high was +8.6 points to 1180.06. Easy come, easy go. This completed
a
-1.5% week for the SPX, while the Dow
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-0.1% on Thursday. The
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volume was 1.35 billion shares with the volume ratio at 16 and breadth +745.
In
the sectors, the
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about
-0.4% and led the downside on the week at -3.0% and -3.9%. The CYC was -2.1%
with the XAU -7.7% as interest rates rose.
Thursday was the 13th day of the current
decline,
and since taking out the
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RST to
set
up, there has not been a close above the high of the low day, which is
currently
Wednesday’s 116.75 SPY low and 117.72 high. This means no short-term RST
long-position trade has been initiated by definition of the filter. A
larger,
more symmetrical RST would be in play if the 01/24 116.37 low was taken out.
The
heavy SPY selling on Thursday was from 3:40 p.m. to 3:55 p.m. ET with the
three
bars over two million shares each. So, there was an institutional agenda,
not
retail sellers.
Daytraders of individual stocks continue to
do
very well by adhering to the “Above the Line” and “Below the
Line” methods which
put you in the highest probability trades in the direction of the trend. The
current 40-week EMA zone for the SPY is 116,
(
DIA |
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IWM |
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120.11. Those are this week’s immediate short-term reversal levels to focus
on.
Most of the energy stocks remain “Above the Line,” so they are a
primary source
of trades for daytraders. There are other stocks that also make that list
and
certainly outperform the major indices during this current move down. Some
of
these non-energy names are
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APD |
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BA |
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BOL |
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CLX |
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EMN |
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HCA |
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NCR |
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PX |
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DGX |
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CBE |
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CSX |
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UNH |
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MAR |
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MO |
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ROK |
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SIAL |
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YUM |
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Regarding the longer-term cycle, my views
haven’t
changed. I expected this bull cycle to last 2.15 – 2.5 years, with the
fifth-leg
measurement highest probability zone at 1254 – 1305. The initial selling
plan
was started in the 1220 – 1230 (Inner Circle) zone on a scale-up unit basis.
The
time factor right now from the October 2002 769 SPX bear market low is 128
weeks, or 2.46 years. The SPX March 2000 – October 2002 bear market move was
133
weeks, or 2.5 years, and for the Dow, it was 143 weeks, or 2.7 years. There
is
very little chance that this will develop into a parabolic upside market, so
time is wasting, but hopefully this fifth leg will reach the measurement
zone.
If not, there is a Plan B. Do you have one?
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.