Here Are The Levels To Watch
What Thursday’s Market Action Tells You
The trading action for the pre-holiday half-day
session of the markets means nothing to me, as it tells you nothing. Economic
reports are exaggerated when the trading is thin, as it was on Friday, and
computer glitch or not in the futures, the half day is already ancient history.
NYSE volume was just 738 billion, the volume ratio 24, and breadth -660. Both
the SPX
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PowerRating) and Dow
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PowerRating) closed at 1663 and just about flat. The SPX closed at 985.70,
and the Dow at 9070.
For Active Traders
After the early down, the SPX gave you the
“no brainer” mentioned Thursday. The SPX traded to a 995 intraday high
on the 10:10 a.m. ET bar, and then down to 983.34, the intraday low, by the
10:40 a.m. bar. Entry was taken prior to the futures snafu, so that commotion
just made it a better trade. 995 is the .618 retracement to the 1015.33 rally
high, and 994 is the .50 retracement to the 1994 low of 435.86 from 1553.
Today’s Plan
The immediate SPX levels above 995 to focus on
today are 999.26, which is the 1.272 Fib extension of the primary leg down from
954.28 to 788.90, and also 998, which is the .382 retracement to the 1982 low.
You also have the 1003.94 level, which is the .786 retracement to 1015.33 from
962.10. I have included a chart today (courtesy of AdvancedGET) that frames out
the current awareness levels for you. Another level to watch is on the Nasdaq,
which has traded in a 5.4% box for a month now between 1686 and 1600. It closed
at 1663 on Friday. 1687 has proved to be a barrier so far. That is the 1.618 Fib
extension of the Dec. 2 1521 high to the March 12 1253 low.
The quarter has come and gone successfully, and
whether the Generals throw some more money at the market this week remains to be
seen. The SPX has cycled over the past year with a high correlation, and it is
in a short-term down cycle period right now through early to mid August. It
doesn’t mean it must do that, but we must be aware that it is the highest
probability until price and volume proves otherwise to the upside.
The market has entered the summertime period
which can produce some very erratic trading, so prudent money and trade
management is essential. No heroes needed. There are more earnings noise this
week which always provides good daytrading opportunities due to the
overreactions and futures games played on the announcements.
Have a good trading day.
Kevin Haggerty
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