If We’re Going To See A Quarter-End Markup, Here’s What Needs To Happen
What Thursday’s Market Action
Tells You
There was another mark
up into the close on Thursday, followed by an air pocket down on
Friday, but there was no agenda on Friday, as the major indices went sideways
from 11:30 a.m. ET into the close. NYSE volume wasn’t heavy at 1.26 billion, but
it was one-sided, as the volume ratio was just 20, which comes off an overbought
three-day moving average of 67. Breadth was -929. The Nasdaq
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$COMPQ |
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PowerRating) had
a similar volume ratio, as the Internet and networking stocks took a hit, in
addition to the semis, with the SOX -3.8%. The
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SMH |
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PowerRating) traded below the 20-day
EMA, hitting a 28.25 intraday low Friday, which is -12.9% from the 32.47 high
five days ago. They closed at 28.50. The 50-day EMA is just below at
27.65.Â
The SMH decline had started right at the one-year
2.0 standard deviation band, as did the
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QQQ |
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PowerRating). The tech weakness Friday was
obvious, as the NDX 100
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$NDX.X |
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$SPX.X |
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PowerRating), which closed at 988.61, -1.0% on the day, as was the Dow
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$INDU |
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PowerRating). All of the major sectors also declined, with the exception of
gold, as the XAU rose +2.1%
For Active Traders
From a trading standpoint on Friday, it was all
about the early reversal down of the opening bar, which is not a big surprise
after watching the previous few trading days with mark ups into the close
followed by air pockets the next morning. If there is to be any quarter-end mark
up that a trader can play, the major indices have to go lower. The SPX makes a
three-bar reversal down below 988.61, and the Dow below 9038. The 20-day EMA for
the SPX is 967.55, just above that 960 – 965 previous high resistance. The SMHs
are closest to a good zone, which is 27 – 27.55 for a tradable quarter-end mark
up, should it happen.
There are some nervous hedge funds out there
hoping for a continued rally into the end of June, and they will try to help the
Generals make it happen if they can, but there are also the Generals out there
that are predisposed to making this happen to their major winners, so this
will mean some erratic price movements both ways.Â
Today’s Plan Of Attack
For daytraders, don’t hesitate to take some
profits off the table on part of your position, and then move your stop to
breakeven. Focus your daytrading longs and shorts in those stocks that had
run-ups of 50% or more during this rally because that’s where the volatility
will be into the end of this second quarter.
Have a good trading day.
Five-minute chart of Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of Friday’s NYSE TICKS