Here’s An Exercise For Your Daily Preparation
The
opening 15-minute flurry took the SPX
(
$SPX.X |
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Chart |
News |
PowerRating)
up to 948.65, which is the high end of
last week’s daily range, with highs between 946.84 and 948.23 going into Friday.
There has been some good resistance from the 944.75 September 2001 low through
948.33 which is the .236 retracement to the September 2000 1530 high. Just above
there’s the 954.28 intraday high on Dec. 6, ’02, and also 953.70, which is the
.236 retracement to the 1553 all-time high.
NYSE volume on option
expiration Friday was 1.48 billion, a volume ratio of 54, and breadth neutral at
just -27 and told us nothing regarding buying or selling pressure. The SPX and
Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) both declined 0.3% to 0.4%, the NDX
(
$NDX.X |
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Chart |
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PowerRating) was -0.8%,
and the
(
QQQ |
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PowerRating)s were -0.9%, while the
(
SMH |
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PowerRating)s ended at -1.9%, led by the
semi equipment stocks
(
AMAT |
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Chart |
News |
PowerRating) -3.9%,
(
KLAC |
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Chart |
News |
PowerRating) -3.2%, and
(
NVLS |
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Chart |
News |
PowerRating)
-3.0%. The semis have pulled back for four days as the major indices have traded
sideways in a five-day range. The SMHs closed at 27.81 with the 20-day EMA just
below at 27.25. If they take the SPX and Dow out of the top of the range, I will
look to play the SMHs or any of the other semis, like KLAC, that set up.
The XLB, which is the
basic industry SPDR, has pulled back four bars to the eight-day EMA, closing at
20.33 for a doji bar close. That gets my attention, so I then look for some of
the basic industry stocks that have setups that are part of the XLB SPDR and are
above the lines, just as the XLB is. Scrolling through the basics, I see setups
in
(
DOW |
Quote |
Chart |
News |
PowerRating), which pulled back to the 20-day EMA on Friday, as did
(
CAT |
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PowerRating)
and
(
DD |
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PowerRating).
(
APD |
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PowerRating) is in the same five-day range as the SPX and above all
the lines, so that also goes on Monday’s watch list.
The XLF, which is the
financial SPDR, is in an ascending triangle for the past 11 days and closed at
the top of the triangle range on Friday, so you do the same drill with some of
the financial stocks, and you will find that
(
MWD |
Quote |
Chart |
News |
PowerRating) has pulled back to the
20-day EMA, as has
(
BAC |
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Chart |
News |
PowerRating), and
(
MER |
Quote |
Chart |
News |
PowerRating) is in the same tight range as the
SPX.
The point of this
exercise is to give you some thoughts for your daily preparation. Sectors don’t
all move in tandem, and if you like to play the retracements in strong trends,
long or short, as I do, you will learn to follow the buying/selling pressure on
a daily basis and see specific groups set up at different times because of this
ebb and flow caused by the Generals rotating to different sectors depending on
various levels.
Expiration Friday
provided an excellent trade when the SPX traded down to the low end of the
weekly range, hitting an intraday low of 938.60 on the 10:30 a.m. ET bar. This
took out Thursday’s low of 938.79 and set up the RST buy with entry above
939.45. The trade carried up to a 948.10 high before fading to close at 944.30.
If you didn’t take the RST entry, you got a second chance on a 1,2,3 higher
bottom with entry above 940.64 on the 12:10 p.m. bar.
Have a good trading day.
Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Friday’s NYSE TICKS