Here’s The Upper End Range Before The Cycle Down Begins
The SPX
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made an early run-up to 935, which is the next previous high
awareness level. See Monday’s commentary. This was the intraday high of 933.88,
and from there a decline to major support which is the 925 longer term
head-and-shoulder neckline and 924 on the .50 retracement of the 1990 low. Key
point: longer-term retracement levels come into play in both directions. From
the 924.55 retracement, it bounced up to the .786 retracement zone of the 933.88
high, which was 931.88. The actual is 931.98.If you took this 1,2,3 lower top
trade entry, it was a three-bar reversal entry below the 931.27 low of the
1:40PM bar.
I try to point these trades out so
you can follow what you learn from the modules or for some of you from the
seminars/tapes. This 1,2,3 lower top trade carried down to 925.18 where it held,
and closed at 926.55 The 240 EMA on the 5-minute chart is right below it at 924.
The parallel line measurement of this 1,2,3 lower top is to about 920,
which is the top of the ascending triangle and right in the 12-month EMA zone.
Take a look at a 120-minute chart of the SPX and you will see what I mean about
the 920 level.
NYSE volume was 1.4 billion, volume
ratio 56, and breadth +431. Both the SPX, -0.4% and the Dow, -0.6%,
finished red while the Nasdaq was marginally green by a point and the QQQ
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was -0.1%. In the sectors, both the SMHs
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1.3%, closed green. The volume drop-off on the SPY was significant at just 35.4
million vs. its 50 million recent volume average. This is the lowest volume for
the SPY since April 21. On the other hand, the QQQ volume was again
above-average for the second day in succession at 81 million, with price closing
at 28.24 versus 28.28 on Friday. That can be a red alert at this extended level
for the QQQs.
As I mentioned yesterday, I am
anticipating a short-term cycle down and don’t expect this current move to
extend beyond 940-954 before it begins, therefore I don’t believe there’s any
kind of position edge here, just a daytrading edge.
An early read on any downside
retracement would be the Dow, which is the laggard on this rally, and will
probably lead any short-term correction as it is just above its 200-day EMA.
Have a good trading day.
Kevin Haggerty
Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs
