Here’s Where We Can Work From
The
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) at -0.4%, and NDX
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) -0.2%
once again diverged from the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating), which was -1.0%, and the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) -1.5%. NYSE volume
expanded to 1.56 billion, the most volume this year. The volume ratio was 32,
for a three-day moving average of 24, which is very short-term oversold, and
breadth had a small positive divergence at -910 vs. -1223 the previous day. The
three-day moving average is -1067, also short-term oversold.
The
(
SMH |
Quote |
Chart |
News |
PowerRating)s ended at
-0.4% and were green most of the day until the last half-hour sell program rush.
The SMHs provided the best Trap Door yesterday with the least amount of chop.
The Trap Door entry was on the 10:15 a.m. ET bar above the signal bar high of
22.45. The trade ended at 22.95, right at the 60-minute 20-period EMA, which was
23 at the time. Some of you might have also caught the short side from the
60-minute 20-period EMA which carried down to 22.38. This corner didn’t take it.
The
(
QQQ |
Quote |
Chart |
News |
PowerRating)s also provided opportunity without the chop of the SPX and Dow.
The SPX held three times
in that 882 – 884 zone before the 3:30 p.m. selloff into the close at 878.36,
right at the 879 2.0 three-month standard deviation band. The intraday low was
877.64. The SPX declined for the fifth day in succession, for a total of 50
points, or -5.4%, while the Dow lost 524 points, or -5.9%. It was the fifth day
in a row with the SPX and Dow closing in the bottom 10% of their ranges, so
there is no question which pressure dominated.
Yesterday’s lows put both
the SPX and Dow right at the 2.0 three-month standard deviation levels. The 2.0
– 3.0 zone is where the fear has gained momentum. The one-way players then tell
you the world is crashing, looks ugly, but as I said yesterday, they didn’t make
the sale last week on the retracement, so essentially, they can p— up a rope
after lots of chatter and no decisions. The only two things that bother me more
are our mighty allies France and Germany and, of course, New York’s own Al
Sharpton running for President on the merits of the Tawana Brawley case.
There are two economic
reports today, and based on the fragile market conditions right now, they could
provide some overreactions for us to work from. As I do this, the Dow futures
are +51 and the S&Ps +5. But any oversold bounce shouldn’t surprise you from the
2.0 – 3.0 standard deviation zones. For the Nasdaq, which closed at 1360, that
zone is 1325 and 1275.
There are a multitude of
1,2,3 lower tops in individual stocks, same as the indices, and as they go
sideways, they then become descending triangles. Most of them will probably
resolve to the downside after a short-term oversold reflex up and at that point
we will have some decent retracements to work from on the long side.
Have a good trading day.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS