If You Didn’t Take The Trade, Consider This
For
the second day in succession, the
SPX
(
$SPX.X |
Quote |
Chart |
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PowerRating) was net change
at the close, of less than a point. The
SPX closed at 916.30 vs. the previous day’s 916.91. The Dow
(
$INDU |
Quote |
Chart |
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PowerRating) was
-0.3% but there was a positive divergence by the Nasdaq
(
$COMPQ |
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Chart |
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PowerRating) at
+0.6%,
(
QQQ |
Quote |
Chart |
News |
PowerRating)s at +0.8% and
(
SMH |
Quote |
Chart |
News |
PowerRating) +0.5%. Most of the auxiliary technology
indices were also green, along with the BBHs, drugs, energy and gold. It was
what I call a neutral day. The NYSE volume was 1.37 billion, volume ratio 46 and
breadth +90.
The pre-market futures
got more red right from the opening and the SPX traded down to a 902.83 intraday
low on the 10:30 a.m. bar. This was the beginning of a very profitable 1,2,3
higher bottom that I couldn’t draw any better. Price broke the logical trendline
which means it was a knife-like downmove with no real swing points to connect,
so you just draw a straight line from above the price bars.
The #2 point was the 907
high of the 11:10 a.m. bar. The #3 point signal bar was a 904.54 low. The .618
retracement to 902.83 was 904.44. Entry was above the 905.14 high of the signal
bar, which was the 11.30 a.m. bar. The 1,2,3 higher bottom entry then recrossed
the 200-day EMA of 905.66 to the upside and the trade ran to an intraday high of
919.68 before closing at 916.30. I would have included the labeled 5-minute
chart but the individual that does it at TradingMarkets is out.
You have to take what the
market gives you and yesterday it was the one good reversal 1,2,3 higher bottom.
If you have the
1,2,3 module and didn’t take the trade because you thought the market was
going to run more to the downside, then you might be one of those kinds of
traders that can’t overcome the hurdle which is that the “hardest trades are
usually the most successful.” Your entry was a reversal in the direction to the
upside and a recross of the 200-day EMA so you must take the trade, as it
fulfilled all other 1,2,3 bottom requirements. The trend entry above 907 also
never looked back.
The QQQs closed at 27.68
after holding the 60-minute 20-period EMA again, which was at about 27.20 at the
time. They made a move to an intraday high of 27.87 before closing at 27.68. The
NDX and Nasdaq Composite continue the positive divergence over the SPX and Dow.
The QQQs 8- and 20- daily chart EMAs are both rising and greater than the
200-day EMA while price closed above both the 8- and 20-day EMAs. The 200-day
EMA is at about 26.60.
The Nasdaq Composite
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
has the same daily chart pattern as the
(
QQQ |
Quote |
Chart |
News |
PowerRating), but the SPX and Dow are not
quite in that zone yet. The SPX is currently in that 7-day narrow range between
924 and 900, and that won’t last much longer. The .38 retracement to yesterday’s
902.86 low is also right at the 240-EMA which is at about 913, so that becomes
the first downside awareness level. The .618 retracement is 909, then you have
the 200-day EMA at about 905.70. The high SPX close so far in this current rally
is 919.02, so I look to that as early entry if it is a green day and the top of
the range looks vulnerable.
Have a good trading day.
Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
