If We Have Carryover Weakness, Here’s The Plan
What Friday’s Action Tells
You
It was quite a week, to say the least. The
range
was 26.1 points on the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) for the week with the 1163.69 low
on
Tuesday, March 29, and the 1189.80 high Friday, followed by a -19.9 point
reversal to an 1169.91 intraday low and closing at 1172.92, -0.6% and +0.1%
on
the week. The
(
SPY |
Quote |
Chart |
News |
PowerRating) opened at 118.63, then made a 119 intraday high
which
enabled position traders to scale out a percentage of their position, but a
trailing -1.0% stop ended the trade below 117.81. The SPY traded to a 116.91
intraday low and closed at 117.43. Traders that played a trailing stop will
get
a chance to re-enter, while other traders who bought below 117 might still
have
a percentage of the initial position. Traders will manage trades in
different
ways, but I prefer the “banking game” (scale out a percentage of
the position
when the trade is in your favor). On the other hand is the XLE position
which
traded to a 43.97 intraday high after a gap-up opening to 43.43 and closed
at
43.93. Low-to-high, it is a +7.8% move so far in three days. Most traders
will
have a percentage of the position remaining after banking some profits on a
scale-up basis. Nice trade.
NYSE volume ended at 1.74 billion shares with
the
volume ratio 36 and breadth only -31, which is not indicative of the big-cap
price decline in the major indices. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was -0.9% to
10,404,
the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) -1.0% to 36.20 and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -0.7% to 1985.
The
sectors were all red with the exception of the
(
OIH |
Quote |
Chart |
News |
PowerRating) at +2.6%, as crude
oil
advanced +3.4%. The retail
(
RTH |
Quote |
Chart |
News |
PowerRating) was -1.6% and the semis
(
SMH |
Quote |
Chart |
News |
PowerRating) -1.4%,
leading the downside. The
(
TLT |
Quote |
Chart |
News |
PowerRating), +0.3%, advanced for the fourth straight
day
and was +1.5% on the week. In fact, the TLT has finished positive six of the
last eight days. Maybe it doesn’t believe the inflation hype.
If there is carryover weakness on Monday back
down to the zones, this corner will look for SPY/
(
DIA |
Quote |
Chart |
News |
PowerRating) or QQQQ long
reversal
entries intraday and carry them over if there is a profit cushion at day’s
end.
The stop on the XLE remaining position is moved to -1.5% from the high. It
is
tight on purpose because the plan was for a short-term trade because of the
sequence/retracement and the return is too good not to bank it. It was not a
trade to play the flag breakout (daily chart) on Friday. We have been
extremely
successful since December 2003 buying retracements and contracted volatility
patterns in the “Above the Line” energy stocks and are not about
to change until
the sector is no longer
“Above the Line”. The XLE was best bought
on the
retracement to the 40.80 – 41 zone, which was also a retracement to the
50-day
EMA in addition to other sequence symmetry outlined in the
Inner
Circle.
This is being done Saturday for
Monday.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.