Here’s Where I See Long Setups Today
You can hear Kevin Haggerty
explain Sequence Trading in an exclusive TradingMarkets interview. Click
here to listen.
What Tuesday’s Action Tells
You
It was a bevy of dojis for the major
indices
yesterday, as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed down less than 2 points,
or -0.2%,
with the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) 10,566, -0.4%. The techs slowed down, with the
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) only -3 points to 2005, and the
(
QQQ |
Quote |
Chart |
News |
PowerRating) -9 cents to
36.36.
NYSE volume expanded a little to 1.52
billion,
with the volume ratio improving to 42 from 31, and breadth +4 vs. a -911
the
previous day, so it was a pause day for sure. The 4 MA of the volume ratio
was
32 on Monday and 34 yesterday, with the five-day RSI at 36. The 4 MA of
advances
minus declines was -678 vs. -858 on Monday. The five-day RSI for the
Nasdaq
and
QQQ are now below 30 at 22.55 and 26.15, with the
(
DIA |
Quote |
Chart |
News |
PowerRating) at 30.15 and
the
(
SPY |
Quote |
Chart |
News |
PowerRating) at 35.48, so we’re getting down to our reflex up
zone.
In the sectors, energy was green, with the
(
OIH |
Quote |
Chart |
News |
PowerRating) +1.5%, while the
(
SMH |
Quote |
Chart |
News |
PowerRating) was +0.5% after having declined -5.5%
the
previous three days.
Wednesday 2/18 |
Thursday 2/19 |
Friday 2/20 |
Monday 2/23 |
Tuesday 2/24 |
|
Index |
|||||
SPX |
|||||
High |
1157.40 | 1158.57 | 1149.81 | 1146.69 | 1144.54 |
Low |
1149.42 | 1146.83 | 1139.00 | 1136.98 | 1134.43 |
Close |
1151.82 | 1147.06 | 1144.10 | 1140.99 | 1139.10 |
% |
-0.5 | -0.4 | -0.3 | -0.3 | -0.2 |
Range |
8.0 | 11.7 | 10.8 | 9.7 | 10.1 |
% Range |
30 | 2 | 47 | 41 | 46 |
INDU |
10672 | 10665 | 10619 | 10610 | 10566 |
% |
-0.4 | -.07 | -0.4 | -.09 | -0.4 |
Nasdaq |
2076 | 2046 | 2038 | 2008 | 2005 |
% |
-0.2 | -1.5 | -0.4 | -1.5 | -0.1 |
QQQ |
37.53 | 36.98 | 36.87 | 36.45 | 36.36 |
% |
+0.2 | -1.5 | -0.3 | -1.1 | -0.2 |
NYSE |
|||||
T. VOL |
1.37 | 1.52 | 1.47 | 1.38 | 1.52 |
U. VOL |
453 | 557 | 387 | 431 | 624 |
D. VOL |
906 | 919 | 1.05 | 937 | 875 |
VR |
33 | 38 | 27 | 31 | 42 |
4 MA |
47 | 45 | 44 | 32 | 34 |
5 RSI |
57 | 49 | 44 | 39 | 36 |
ADV |
1289 | 1214 | 1168 | 1188 | 1654 |
DEC |
2003 | 2071 | 2117 | 2099 | 1650 |
A-D |
-714 | -857 | -949 | -911 | +4 |
4 MA |
-101 | -209 | -250 | -858 | -678 |
SECTORS |
|||||
SMH |
+0.5 | -1.9 | -0.8 | -2.8 | +0.5 |
BKX |
-0.6 | +.06 | -0.4 | +0.2 | -0.1 |
XBD |
-0.2 | -1.3 | -0.6 | -1.4 | -1.2 |
RTH |
-0.1 | +0.4 | +1.1 | -0.5 | -0.1 |
CYC |
-0.6 | +0.1 | -0.7 | -0.8 | -0.3 |
PPH |
-1.7 | +0.4 | -0.3 | -0.5 | +0.5 |
OIH |
-1.8 | -.08 | -.03 | -0.5 | +1.5 |
BBH |
+0.8 | -0.4 | -0.1 | -0.9 | -0.3 |
TLT |
+.07 | +.01 | -0.8 | +0.5 | +0.2 |
XAU |
-4.6 | -0.2 | -2.7 | -1.0 | +3.0 |
^next^
For Active
Traders
If you trade the E-mini futures or the SPY,
it
was a good day because of the travel range and symmetry. The SPY was an
RST
long
entry above 114.24 after making the 114 low on the 10:10 a.m. ET bar. This
trade
advanced up to 115 at the 240 EMA (five-minute chart). That was the
initial
resistance I mentioned in yesterday’s commentary. Both the 114 low and 115
high
were symmetrical extensions of their previous legs. After hitting 115,
there
was
an RST sell trade below 114.84, and after a move down to 114.44, then a
rally
back to exactly 114.84, the SPY traded down to its intraday lows just
below
114.
That set up another RST buy pattern with entry above 114.11 on the 2:50
p.m.
bar, which carried only to 114.49, closing at 114.40. The SPY closed down
only
19 cents on the day, but the three RST setups covered over 2 points of
tradable
price after entries. I hope you RST veterans caught some part of those
moves. If
you didn’t, you better go back to the drawing board.
The five-day RSI for the Nasdaq and QQQ are
now
below 30, and any move down by the SPX and Dow to their 50-day EMA zones
would
get them below 30 also. That is 10,438 for the Dow and 1122 on the SPX.
The
4 MA
of the volume ratio has been below 35 for the past two days, as the SPX
has
declined five days in succession, with the last four making lower highs
and
lows, so you are ready for any reflex up.
Today’s
Action
The SPX closed at 1139.10, just below the
first
pivot, which is the 20-day EMA at 1141.38. Depending on today’s action,
you
could play any re-cross of that pivot both ways to catch a move. The
actual
SPX
volume has also declined the last four days. The Dow closed at 10,566,
below
the
20-day EMA of 10,595. The low close of its trading range so far this year
is
10,410 back on 01/02/04. If there is an early down, the 1.0 volatility
band
for
the SPX is 1132.81.
The Nasdaq, QQQ and SMH are another story,
as
they have been correcting since 01/26/04, and the SMH since 01/13/04.
Consequently, both their five-day RSIs are well below 30, as I mentioned
before
and have retraced to some levels that we can work with. Yesterday, the
Nasdaq
bounced off its 89-day EMA of 1992, which was good for about a +25 point
move.
Were you involved, or were you just not aware because you didn’t do the
work?
The Nasdaq closed at 2008. The 1992 89-day EMA is below and the 15-week
EMA
is
just above at 2012, so price is bracketed, and we have something to work
against, depending on the price action. The next RST long setup on your
five-minute charts will come into play if the 1991.05 low is taken out
today.
The QQQ has also had declining volume for
the
past four down days, closed yesterday at 36.36, right on the 15-week EMA,
with
trading range support and the 89-day EMA at 36 and then the low end of
that
range and the 40-week EMA at 34.10. A continuation below 36 sets up an
AB=CD
leg
at the 35.33 level, and below that you have the first extension of the
last
leg
up at 35.87 and the 1.618 extension at 35.30. There is confluence, so I
prefer
long side setups in the QQQs in this zone. Similar confluence in the
Nasdaq
would be the 1965 – 1950 level.
Initial upside resistance for the QQQ today
is
36.60 at the 240 EMA (five-minute chart). Any RST sell setup on that chart
has
to take out 36.60 first. For the SPY, the initial resistance is 114.75 and
the
RST sell territory is taking out yesterday’s 115 high.
Have a good trading day,
Kevin Haggerty
You can hear Kevin Haggerty
explain Sequence Trading in an exclusive TradingMarkets interview. Click
here to listen.