Here’s What The Current Leg Is Up Against
What Friday’s Market Action Tells You
Nobody
showed up to play the game on Friday, but with the last trading day of the
quarter today, the Generals have held on for the gains. Maybe some new money
gets put to work the first few days of July, then you have the July 4 holiday on
Friday. NYSE volume on Friday was light at 1.2 billion, volume ratio 31, and
breadth neutral at -158.Â
After the early advance from 9:30 to 11:00 a.m.
ET, the major indices trended down into the close. The SPX
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$SPX.X |
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Dow
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PowerRating) both lost 1.0%, with the SPX closing at 976.22, and the Dow at
8989. The Nasdaq
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QQQ |
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29.83, right at its 20-day EMA of 29.95. The QQQs have held the 29.50 level for
almost all of June, so breaking below that would take it to the 50-day EMA of
28.98.
For Active Traders
My longer-term “523” intraday trend
indicator stays negative until the QQQs can trade above, and hold, 30.11. Those
of you who attended last weekend’s seminar or have received the archives video
and 553-page trading manual should be tracking all of the major indices, HOLDRs
and your key big cap stocks on a daily basis using the “523”, as it
will keep you in sync with the longer-term intraday trend, and then you can
watch price as it gets to any key retracement or extension level in conjunction
with the longer-term trend of this rally, which is since March 12, or even the
Oct. 10 lows, if there is a deeper retracement.
As of Friday, the “523” trend
identification method is also negative for the
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SMH |
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28.56, in addition to the
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SPY |
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PowerRating) that has to re-cross the 99 level, having
closed at 97.68 on Friday. Trading below 97.57 continues a pattern of lower
highs and lower lows since the 102.17 top on June 17, which was the 1015.33 top
for the SPX, which closed Friday at 976.29. Below 973.80 keeps the downside move
in sync for the SPX. We have been able to
play the reflexes up, as the Generals hold the quarter’s gains, but the
longer-term intraday trend is currently down.
Looking at the SPX from the Oct. 769 low, you see
that this current rally is leg 3 for you Elliott Wavers, which started on March
12. The 1.618 extension of the last primary leg down from 954.28 to 788.90 is
1056, and the 1.272 is 1000. The SPX has almost split these levels at 1015. The
.382 retracement to 1553 from 769 is 1068. This current leg might have some more
numeric room to the upside, but not much, and unlikely. There is an SPX cycle
that comes into play through July and into the beginning to mid August, so any
decent retracement down should continue into this time period. The 4.0% decline
so far in the SPX is not nearly enough to clear the decks for the next move.
There is a confluence of numbers around the 960 level. Below that is the
longer-term 12-month EMA at 936, which would be just a -7.8% decline if 1015
proves to be the high of this third leg.Â
The significant thing is having a strategy, and
taking some money off the table after a +30% move for the SPX from 769 is one of
them. If you got in after the retracement to 789, it was still a +25% move. You
don’t catch many moves of that magnitude, so you have to bank some of it. If you
just entered above 1000 for the first time, then good luck on your mission. And
the odds are more in your favor waiting for a retracement before making a
decision.
Today’s Plan Of Attack
I see the
futures are up in the Globex, with the S&Ps +4.5, the Dow +35, and the
Nasdaq +6.5, so maybe we get an early up, then sideways and drift kind of a day,
which isn’t the ideal action for a daytrader. The market will obviously get
slower into Friday as people take early holidays.
Have a good trading day.
Kevin Haggerty
