Good Things Happen From Key Price Zones — Here’s How
What Monday’s Action Tells
You
The market action yesterday was void of any
knee-jerk first-hour travel range which professional traders thrive on. It
was
trend up for the major indices into the 1:05 p.m. ET bar, then declining to
new
intraday lows on the 3:35 p.m. bar before a closing mark-up into the close.
The
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1125.81, +0.2%, on NYSE of 1.3 billion. The
volume
ratio was positive at 63 and breadth was +756. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was
just +2
points to 10,315, while continuation of the
(
SMH |
Quote |
Chart |
News |
PowerRating), +1.8%, helped the
(
QQQ |
Quote |
Chart |
News |
PowerRating) to a 35.58 close and +1.3% with the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +0.9%
to
1910.
The primary price and volume thread yesterday
for
the major index screens (my commentary page) was the semiconductors as
shorts
continue to get squeezed by the Generals. The SMHs have had a significant
volume
increase the past three days with 40 million, 34 million and 38 million
yesterday. It closed at 30.91 with the 50-day EMA at 31.41. Good things
happen
from key price zones at the lowest common denominator.
For Active
Traders
The initial first-hour strategy for S&P
traders
yesterday (SPY or futures) was the SPY
Opening Reversal
(OR) and Flip Top
above
113.31 and previous day’s high that ran to 113.74 and the downtrend channel
line
from the 116.95 bull market high. This resistance produced the afternoon
downtrend to 113 and the 240 EMA. The last half-hour bounce was to
113.50.
The QQQ opened above the previous day’s high
and
closing range, then traded below it on the second bar before the Opening
Reversal carried it to a 35.72 intraday high. Yesterday’s framework gave you
the
35.75 – 36 level as the initial resistance zone starting the week. (See SPY
and
QQQ charts below.)
Yesterday’s closing prices are pushing the
initial resistance zones, and I have included three charts to highlight
this.
Today’s
Action
The early futures are flat at 8:00 a.m., but
maybe the 8:30 a.m. Retail Sales figure can get some action started. This is
the
21st day of this current move, and you have the upside levels to be aware of
from yesterday’s commentary.
This corner’s market outlook hasn’t changed.
The
position entries were taken in the retracement price zones when the charts
you
see today were reversed. All existing index proxy longer-term positions are
protected with puts, or else you decided to play it from the longer-term
call
side only. It doesn’t matter whether we get a fifth leg above 1163.23 or not
because the terror alerts and election place the major indices at a
significant
risk level. Against these positions, you continue to trade all intraday
short
setups at resistance and take the normal long setups as they occur, but with
tight stops.
Have a good trading day,
Kevin Haggerty
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