Here Is A High Probablity Level To Focus On Today
What Wednesday’s Action Tells
You
The market action was again indicative of
allocation movement. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was +0.2%, while the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) off a bit at 10,529, -0.09%. The SPX range expanded to 9.9
points,
and traders had a good day based on the way the travel range played out. You
again see the rotating allocation, as NYSE volume expanded to 1.7 billion,
while
the volume ratio was 57 and breadth was only +234. It adds up to churning,
but
the SPX price closed in the top percentage of its range for the third day in
succession, while the five-day RSI is now 92 and pushing the envelope. On
the
other hand, technology led, as the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was +1.0% and the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s +0.9%, closing at 37.68.
Fifty percent of the position was taken off
the
table yesterday at +5.0%.
(
MSFT |
Quote |
Chart |
News |
PowerRating) and
(
GE |
Quote |
Chart |
News |
PowerRating) were also taken off the
pad at
decent gains, but all of the XLK position still remains and will probably be
sold today on any kind of strength.
In the major sectors, the
(
SMH |
Quote |
Chart |
News |
PowerRating) was +1.2% and
(
INTC |
Quote |
Chart |
News |
PowerRating), on an upgrade hype, advanced +3.3%. The
(
BBH |
Quote |
Chart |
News |
PowerRating) ended +1.6%,
while the
(
OIH |
Quote |
Chart |
News |
PowerRating) was -1.6%. The bond/gold game was the same as the previous
day, with the
(
TLT |
Quote |
Chart |
News |
PowerRating)s +0.4% and the XAU -2.1%. I would like to see a decent
rally in the TLTs to lay out more shorts.
| size=2> |
Thurs.
1/1 |
Friday
1/2 |
Monday
1/5 |
Tuesday
1/6 |
Wednesday
1/7 |
| color=#0000ff>Index |
|
|
|||
| color=#0000ff>SPX |
|
|
|
||
| color=#0000ff>High |
H
|
1118.85
|
1122.22
|
1124.48
|
1126.33
|
| color=#0000ff>Low |
|
1105.08
|
1108.48
|
1118.44
|
1116.45
|
| color=#0000ff>Close |
O
|
1108.49
|
1122.22
|
1123.67
|
1126.33
|
| color=#0000ff>% |
|
-0.3
|
+1.2
|
+0.1
|
+0.2
|
| color=#0000ff>Range |
L
|
13.8
|
13.7
|
6.0
|
9.9
|
| color=#0000ff>% Range |
|
25
|
100
|
87
|
100
|
| color=#0000ff>INDU |
I
|
10410
|
10544
|
10539
|
10529
|
| color=#0000ff>% |
|
-0.4
|
+1.3
|
-.05
|
-.09
|
| color=#0000ff>Nasdaq |
D
|
2007
|
2047
|
2057
|
2078
|
| color=#0000ff>% |
|
+0.2
|
+2.0
|
-0.5
|
+1.0
|
| color=#0000ff>QQQ |
A
|
36.40
|
37.12
|
37.32
|
37.68
|
| color=#0000ff>% |
|
-0.2
|
+2.1
|
+0.6
|
+0.9
|
| color=#0000ff>NYSE |
Y
|
|
|
|
|
| color=#0000ff>T. VOL |
|
1.1
|
1.50
|
1.49
|
1.7
|
| color=#0000ff>U. VOL |
|
593
|
1.13
|
778
|
957
|
| color=#0000ff>D. VOL |
|
526
|
364
|
688
|
709
|
| color=#0000ff>VR |
|
53
|
76
|
53
|
57
|
| color=#0000ff>4 MA |
63
|
59
|
59
|
60
|
|
| color=#0000ff>5 RSI |
74
|
84
|
87
|
92
|
|
| color=#0000ff>ADV |
1745
|
2242
|
1724
|
1775
|
|
| color=#0000ff>DEC |
1503
|
1073
|
1579
|
1541
|
|
| color=#0000ff>A-D |
+242
|
+1169
|
+145
|
+234
|
|
| color=#0000ff>4 MA |
+606
|
+458
|
+355
|
+447
|
|
| color=#0000ff>SECTORS |
|
|
|
|
|
| color=#0000ff>SMH |
-0.2
|
+3.6
|
+0.6
|
+1.2
|
|
| color=#0000ff>BKX |
-0.6
|
+0.8
|
+0.2
|
-.07
|
|
| color=#0000ff>XBD |
-0.4
|
+1.2
|
+0.4
|
+1.0
|
|
| color=#0000ff>RTH |
-1.9
|
+0.4
|
+1.5
|
-.09
|
|
| color=#0000ff>CYC |
-0.5
|
+1.7
|
-0.5
|
-.02
|
|
| color=#0000ff>PPH |
+0.7
|
+1.1
|
-0.2
|
+1.0
|
|
| color=#0000ff>OIH |
-0.3
|
+1.2
|
-0.1
|
-1.6
|
|
| color=#0000ff>BBH |
+0.4
|
-0.5
|
+0.1
|
+1.6
|
|
| color=#0000ff>TLT |
-1.1
|
-0.2
|
+1.1
|
+0.4
|
|
| color=#0000ff>XAU |
+0.6
|
+3.1
|
-2.0
|
-2.1
|
For Active Traders
The sector action provided traders some good
opportunities. We looked for follow through to the downside in some
cyclicals
and got early trade-through short entries below the previous day’s low in
(
DD |
Quote |
Chart |
News |
PowerRating),
(
CAT |
Quote |
Chart |
News |
PowerRating) and
(
AA |
Quote |
Chart |
News |
PowerRating), all of which traded down -1.5% to -1.04%
from
entry levels. Many of the smokestacks declined more, but they gapped open on
the
downside, and by 11:00 a.m. ET,
(
NUE |
Quote |
Chart |
News |
PowerRating) was -4.7%,
(
UNP |
Quote |
Chart |
News |
PowerRating) -3.5% and
(
NSC |
Quote |
Chart |
News |
PowerRating) -4.5%. No question money was being taken off the table in the
smokestacks.
We were also anticipating any follow through
in
some of those retail stocks mentioned yesterday, like
(
KSS |
Quote |
Chart |
News |
PowerRating) which was
+3.9%
the previous day and then retraced 50% of Tuesday’s gains, giving you a Trap
Door setup yesterday at the 240 EMA. I have included that chart today, and
you
can see the 44.50 low vs. the 44.58 .50 retracement to the previous day’s
low
with the
Trap Door above 44.68. From there, a
Slim Jim formed with a 45.20
high,
and the breakout was also above all of its EMAs and carried up to 46.20
where
there was a Fib extension confluence zone where price reversed to the
downside.
I have also included the
(
SPY |
Quote |
Chart |
News |
PowerRating) chart with
the
Trap Door at the 240 EMA with entry above 112.09 which traded up to 112.80
before declining to 112.30 and then rallied in the last hour-and-a-half to a
113.06 high, closing at 112.96 (not shown on chart). This Trap Door followed
an
opening reversal with entry below 112.35. I have said it before that at this
time of year, the Generals do their thing, and there are many different
crosscurrents, so you have to take the higher probability setups and trail
with
tighter stops and/or take smaller-sized positions.
From yesterday’s trading-range focus list,
(
ORCL |
Quote |
Chart |
News |
PowerRating) was +2.8%,
(
MU |
Quote |
Chart |
News |
PowerRating) +3.9% and
(
EMC |
Quote |
Chart |
News |
PowerRating) +2.2%, and all three have
had
increasing volume the last three days as the Generals rotate some cash into
them, reducing some other overvalued positions.
Today’s
Action
For today, the semis will also be a focus,
along
with the basics and retail stocks. The SMHs closed at 43.65, +1.2%, led by
INTC
+3.3%, but all three semiconductor equipment stocks closed red, with
(
KLAC |
Quote |
Chart |
News |
PowerRating)
-0.7%,
(
NVLS |
Quote |
Chart |
News |
PowerRating) -1.2% and
(
AMAT |
Quote |
Chart |
News |
PowerRating) -0.2%. The double top high of this
rally was 44.70 on Nov. 7, 44.65 on Nov. 12 and then a third attempt at
44.39 on
Dec. 1. The past three days of advancing price has been on slightly below
average volume. If the SMHs rally from here, we might get both a short and
then
a long decision near the top of the range. Without the semi equipment stocks
advancing, I don’t see the SMHs running away to the upside, and there is a
better chance of a fourth leg down before a fifth leg up to new highs (see
your
weekly chart). That outcome we can’t predict, but I do know that it is a
high
probability level for a trade either way with good risk/reward because stops
are
so close to entry.
Have a good trading day,
Kevin Haggerty
