I Like This Bet
What Friday’s Action Tells
You
Last week ended at new rally highs for all of the
major indices as they extend the trading tree even more into this significant
retracement zone. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1139.83, +1.6% on the week,
while the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was +1.3% at 10,601. Technology led the week, with
the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +2.6% and the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s 2.7%, closing at 38.16.
It was option expiration, so the big NYSE volume days were Thursday at 1.67
billion and Friday at 1.72 billion.
| size=2> |
Monday
1/12 |
Tuesday
1/13 |
Wednesday
1/14 |
Thursday
1/15 |
Friday
1/16 |
Net
|
| color=#0000ff>Index | ||||||
| color=#0000ff>SPX | ||||||
| color=#0000ff>High |
1127.85
|
1129.07
|
1130.75
|
1137.11
|
1139.83
|
1139.83
|
| color=#0000ff>Low |
1120.90
|
1115.19
|
1121.22
|
1124.50
|
1132.05
|
1115.19
|
| color=#0000ff>Close |
1127.23
|
1121.22
|
1130.52
|
1132.05
|
1139.83
|
1139.83
|
| color=#0000ff>% |
+0.5
|
-0.5
|
+0.8
|
+0.1
|
+0.7
|
+1.6
|
| color=#0000ff>Range |
7.0
|
13.9
|
9.5
|
12.6
|
7.8
|
24.6
|
| color=#0000ff>% Range |
90
|
43
|
98
|
63
|
100
|
100
|
| color=#0000ff>INDU |
10485
|
10427
|
10538
|
10554
|
10601
|
|
| color=#0000ff>% |
+0.3
|
-0.6
|
+1.1
|
+0.1
|
+0.4
|
+1.3
|
| color=#0000ff>Nasdaq |
2112
|
2096
|
2111
|
2109
|
2140
|
|
| color=#0000ff>% |
+1.2
|
-0.7
|
+0.7
|
-0.1
|
+1.5
|
+2.6
|
| color=#0000ff>QQQ |
38.35
|
37.95
|
38.25
|
38.18
|
38.56
|
|
| color=#0000ff>% |
+1.6
|
-1.0
|
+0.8
|
+0.3
|
+1.0
|
+2.7
|
| color=#0000ff>NYSE |
|
|
|
|
|
|
| color=#0000ff>T. VOL |
1.47
|
1.55
|
1.51
|
1.67
|
1.72
|
1.58
|
| color=#0000ff>U. VOL |
914
|
608
|
1.11
|
849
|
1.25
|
946
|
| color=#0000ff>D. VOL |
535
|
921
|
376
|
814
|
447
|
619
|
| color=#0000ff>VR |
63
|
40
|
75
|
51
|
74
|
|
| color=#0000ff>4 MA |
56
|
52
|
54
|
57
|
60
|
|
| color=#0000ff>5 RSI |
67
|
55
|
67
|
69
|
|
|
| color=#0000ff>ADV |
2079
|
1627
|
2236
|
1638
|
1894
|
1895
|
| color=#0000ff>DEC |
1230
|
1687
|
1047
|
1661
|
1392
|
1403
|
| color=#0000ff>A-D |
+849
|
-60
|
+1189
|
-23
|
+502
|
+2457
|
| color=#0000ff>4 MA |
+460
|
+386
|
+489
|
+489
|
+402
|
|
| color=#0000ff>SECTORS |
|
|
|
|
|
|
| color=#0000ff>SMH |
+2.2
|
-2.4
|
-0.2
|
+1.2
|
+0.4
|
+1.2
|
| color=#0000ff>BKX |
-.01
|
-0.7
|
+0.8
|
+0.8
|
+0.3
|
+1.1
|
| color=#0000ff>XBD |
+1.1
|
-0.2
|
+1.6
|
+1.2
|
+2.2
|
+5.9
|
| color=#0000ff>RTH |
-0.3
|
+0.7 |
+0.8
|
+0.7
|
-0.2
|
+1.7
|
| color=#0000ff>CYC |
+0.6
|
-0.2
|
+0.8
|
-.07
|
+0.5
|
+1.0
|
| color=#0000ff>PPH |
-0.1
|
-0.6
|
+0.1
|
+.05
|
-0.3
|
+0.4
|
| color=#0000ff>OIH |
-0.7
|
-0.4
|
-1.6
|
-1.7
|
+2.3
|
-2.1
|
| color=#0000ff>BBH |
-0.2
|
-0.2
|
+0.5
|
+0.8
|
+1.4
|
+2.3
|
| color=#0000ff>TLT |
-.08
|
+0.7
|
+0.4
|
+0.4
|
-0.7
|
0
|
| color=#0000ff>XAU |
-1.7
|
-2.7
|
-4.1
|
-4.0
|
+1.2
|
-11.3
|
The brokers led the major sectors at +5.9% on the
week, followed by the
(
BBH |
Quote |
Chart |
News |
PowerRating) +2.3%. Both the
(
SMH |
Quote |
Chart |
News |
PowerRating), +1.2%, and the BKX,
+1.1%, lagged the SPX, while the RTH was in line at +1.7% for the week. The
(
TLT |
Quote |
Chart |
News |
PowerRating)s finished flat, but the XAU had an air pocket week at -11.3%.
The price persistency for the SPX has been
extraordinary having advanced over 34% from the 848 March 31 low without
even a
5.0% or 6.0% decline close-to-close. In fact, from the 12/10 low close of
1059,
the SPX has advanced +7.6% to Friday’s 1139.83 close without even a 1.0%
close-to-close decline on the daily chart. However, the travel range on the
30-minute chart has seven such 1.0% moves on a close-to-close basis, so
there
has been opportunity both ways for intraday traders, but no daily chart
retracement setups for position traders.
Like the days of old,
(
JNPR |
Quote |
Chart |
News |
PowerRating) had
“better
than expected” results on Friday and sent the stock up +31% and carried
other
SPX stocks, like
(
AMCC |
Quote |
Chart |
News |
PowerRating), +13.6%,
(
CIEN |
Quote |
Chart |
News |
PowerRating), +18.8%, and
(
JDSU |
Quote |
Chart |
News |
PowerRating),
+15.7%, to their double-digit gains. It was all communication equipment and
networkers on Friday.
The Dollar had a reflex last week, and this week
we will see if it was mostly short-covering or whether it will retrace some
percentage to the last swing point high around 100 (US Dollar Index). If so,
the multinationals remain on the focus list as activity will certainly accelerate
in those stocks.
^next^
For Active Traders
Trading in the major indices on Friday was trend
up after the first hour, and the SPX total range Friday was just 7.8 points,
but in one direction, so you either got on board early, or you didn’t. Nothing
done here. There are quite a few numbers in the 1150 – 1160 zone, so it’s a
test for the SPX, and no interest here for initiating any new index long positions,
as there is no edge. This corner is very happy with the long synthetic straddles.
The AIV for the SPX was 12.76 on Friday, so it’s straddle time for this corner,
and then trade the reactions. I am banking on the SPX either reversing in this
1150 -1160 zone, maybe a touch above, or else trading through the zone to the
next level at about 1253. It is a win-win in either of these outcomes and a
defined loss if price goes sideways for the next few months and implied volatility
declines even more. I like the bet.
Regardless of the price persistence in the
major
indices, there continues to be some rolling retracements in the various
sectors,
with the best being the SMHs declining to the sequence zone around 38.50 in
mid-December before the recent 19% swing to a 45.78 high, closing Friday at
45.32.
For Today
Coming into today, some of the energy stocks,
like the
(
OIH |
Quote |
Chart |
News |
PowerRating)s,
(
BHI |
Quote |
Chart |
News |
PowerRating),
(
SII |
Quote |
Chart |
News |
PowerRating),
(
RIG |
Quote |
Chart |
News |
PowerRating),
(
NE |
Quote |
Chart |
News |
PowerRating),
(
NBR |
Quote |
Chart |
News |
PowerRating),
(
DO |
Quote |
Chart |
News |
PowerRating),
(
BJS |
Quote |
Chart |
News |
PowerRating),
(
APA |
Quote |
Chart |
News |
PowerRating) and
(
XOM |
Quote |
Chart |
News |
PowerRating) have pulled back to their 20-day
EMAs, so they now rotate back to the focus list in case the Generals or
hedge
funds show up.
The balance of the XLE position is still
intact,
as it hasn’t closed below 27.50 yet after hitting the 28.33 high last week.
The
XLE is from the 25 breakout of the symmetrical triangle in early December.
Stocks that could regain momentum after
coming
out of the top of their ranges are
(
MERQ |
Quote |
Chart |
News |
PowerRating),
(
PHTN |
Quote |
Chart |
News |
PowerRating) and
(
CAT |
Quote |
Chart |
News |
PowerRating).
Also,
the XLBs traded down to 25.93 last week, so that stop has been moved down
below
breakeven and in the money.
(
INTC |
Quote |
Chart |
News |
PowerRating) closed Friday at 32.89, just above
its
20-day EMA of 32.78, and a 32 60-day intraday low on both Thursday and
Friday.
The 50-day EMA is lower at 32.13. INTC is always a key focus because it is
the
primary weighting of the SMHs, in addition to a primary component of the SPX
and
Dow.
Based on the early futures at 7:45 a.m. ET,
the
first index contra trade might come from higher levels. The S&Ps are
+2.6, the
Dow +28 and Nasdaq futures +8.
Have a good trading day,
Kevin Haggerty
