Good Things Happen To ‘Above The Line’ Stocks
What Wednesday’s Action Tells
You
The market action yesterday was ugly,
relative to
the internals, in spite of the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) finishing small green at
1172.53, up less than a point, and the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) -14 points to
10,456.
NYSE volume expanded again to 2.24 billion shares with a volume ratio of 33
and
breadth -1873, which is certainly a big negative divergence to price.
However,
technology came out strong, and remained that way, with the semiconductors
making a reflex with the
(
SMH |
Quote |
Chart |
News |
PowerRating) +1.5% which carried the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) to a
+0.4% day. Healthcare/Drugs were also leaders, with the
(
PPH |
Quote |
Chart |
News |
PowerRating) +1.7% and
XLV
+1.1%. Another defensive sector, the XLP (consumer staples), also closed
green
at +0.7%.
Bonds had a quick bounce after three days
down
with the
(
TLT |
Quote |
Chart |
News |
PowerRating) +0.5%, which meant the XAU was down again at -1.9%, Gold
($GOLD) -1.0% and crude down big at -4.0%. With the interest rates up, the
US
Dollar ($US) was +0.8% and $CRB -2.1%, so the wheels are in sync. This
scenario
carried over to obvious red sectors, like energy, with the
(
OIH |
Quote |
Chart |
News |
PowerRating) -3.3%,
XLE
-1.9%, XLB (basic materials) -1.0% and XLI (industrials) -0.6%. The
financials
were a mixed bag with the XBD -1.1%, XLF +0.2% and BKX +0.1%.
In the major indices, the
(
DIA |
Quote |
Chart |
News |
PowerRating) had an
intraday low of 104.21 on the 10:50 a.m. ET bar vs. the 40-week EMA at
104.13.
This was a reversal bar on an expansion of volume and range, closing above
the
previous high, and four closes, and also in the top of that bar’s range
(five-minute chart). The DIA worked up to a 104.89 high by the 2:05 p.m. bar
before fading to a 104.41 close.
The QQQQ hit a 36.07 low on the first bar,
and
there was an inside-bar-pattern entry above 36.19 which traded up to 36.49,
but
faded to close at 36.26. The
(
SPY |
Quote |
Chart |
News |
PowerRating) made a 116.75 intraday low followed
by a
second Net Plus entry above 117.10, trading up to 117.60 and also fading to
close at 117.
There were some good
Trap Door trades from
the
current
Inner Circle focus stocks, like
(
CVS |
Quote |
Chart |
News |
PowerRating),
(
NCR |
Quote |
Chart |
News |
PowerRating),
(
MON |
Quote |
Chart |
News |
PowerRating),
(
DGX |
Quote |
Chart |
News |
PowerRating) and
(
MWD |
Quote |
Chart |
News |
PowerRating). Scroll the focus list, and you will always find a
setup. Good things happen to “Above the Line” stocks and vice
versa.
We start Thursday with the same 40-week EMA
price
zone for the SPY and DIA (see yesterday’s SPY weekly chart), so the downside
focus level is obvious. The NYSE is closed on Good Friday, so it is a long
weekend with many professionals probably bailing out early, so this means
there
could be some erratic price movement in many stocks, so don’t be a hero and
keep
stops tight, or else reduce position size and widen stops.
This is being done Wednesday for
Thursday.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.
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