If You’re A Sequence Trader, You Know What To Do Today
What Thursday’s Action Tells
You
After three weak days up with rising price,
there
should be no surprise about yesterday’s down day. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
closed
at 1113.96, 0.7%, as did the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) at 10,241. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed at 1937, -1.0%, while the
(
QQQ |
Quote |
Chart |
News |
PowerRating) closed at 35.26,
-0.8%.
NYSE volume was in line at 1.51 billion,
while
the volume ratio at 20 and breadth -2085 were in sync. The 4 MA of the
volume
ratio remains neutral at 51, and the 4 MA of breadth is now -226. Both have
more
downside in order to provide any reflex opportunity from a short-term
oversold
condition, which would be best from the 1078 – 1065 SPX zone. There is
nothing
that the market has done over the last 10 days to indicate a change in the
current passive action.
All of the primary sectors, except the semis
with
the
(
SMH |
Quote |
Chart |
News |
PowerRating) +0.4% and
(
PPH |
Quote |
Chart |
News |
PowerRating) +0.2%, declined more than the SPX
yesterday.
The XBD and RTH were both -1.9%, the CYC -1.6%, BKX -1.3% and the
(
OIH |
Quote |
Chart |
News |
PowerRating)
-1.9%.
On the bond market side, the
(
TLT |
Quote |
Chart |
News |
PowerRating)s were
-0.3%, closing at 82.40, just above the 08/14/03 low of 80.91 and obviously
oversold. The 5 RSI is 19 and 14-day is 27, so don’t be surprised for any
short-term quick up moves in the TLTs.
| Â | Friday
4/30 |
Monday
5/3 |
Tuesday
5/4 |
Wednesday
5/5 |
Thursday
5/6 |
Index |
|||||
| SPX Â |
|||||
High |
1119.26 | 1118.72 | 1127.74 | 1125.07 | 1121.53 |
Low |
1107.23 | 1107.30 | 1112.89 | 1117.86 | 1106.20 |
Close |
1107.30 | 1117.56 | 1119.51 | 1121.58 | 1113.96 |
%Â |
-0.6 | +0.9 | +0.2 | +0.2 | -0.7 |
Range |
12.0 | 11.4 | 14.8 | 7.2 | 15.3 |
% Range |
0 | 90 | 45 | 52 | 51 |
INDUÂ |
10226 | 10314 | 10317 | 10311 | 10241 |
%Â |
-0.5 | +0.9 | +.03 | -.06 | -0.7 |
Nasdaq  |
1920 | 1939 | 1950 | 1957 | 1937 |
%Â |
-2.0 | +1.0 | +0.6 | +0.4 | -1.0 |
| QQQÂ |
34.77 | 35.10 | 35.25 | 35.53 | 35.26 |
%Â |
-2.4 | +1.0 | +0.4 | +0.8 | -0.8 |
NYSEÂ |
|||||
T. VOLÂ |
1.63 | 1.57 | 1.67 | 1.47 | 1.51 |
U. VOLÂ |
468 | 1.01 | 1.04 | 811 | 297 |
D. VOLÂ |
1.14 | 537 | 603 | 635 | 1.20 |
VRÂ |
29 | 65 | 63 | 56 | 20 |
4 MAÂ |
29 | 32 | 45 | 53 | 51 |
5 RSIÂ |
22 | 42 | 45 | 49 | 37 |
ADVÂ |
1354 | 1997 | 1904 | 1638 | 635 |
DECÂ |
1909 | 1312 | 1398 | 1647 | 2720 |
A-DÂ |
-555 | +685 | +506 | -9 | -2085 |
4 MAÂ |
-872 | -796 | -235 | +157 | -226 |
SECTORSÂ |
|||||
SMHÂ |
-1.7 | -0.4 | +1.7 | +0.4 | +0.3 |
| BKXÂ |
-.07 | +0.8 | +0.6 | +.06 | -1.3 |
XBDÂ |
-1.4 | +0.8 | +0.8 | -0.5 | -1.9 |
RTHÂ |
-0.6 | +0.6 | -0.5 | +0.3 | -1.9 |
CYCÂ |
-0.5 | +0.7 | +0.7 | -.05 | -1.6 |
PPHÂ |
+.03 | +1.3 | +0.4 | +0.3 | +0.2 |
OIHÂ |
-0.2 | +2.3 | -0.9 | -1.4 | -1.8 |
| BBHÂ |
-0.3 | +0.4 | -1.1 | +1.9 | -2.0 |
TLTÂ |
+0.4 | +0.1 | -0.7 | -0.3 | -0.3 |
| XAUÂ |
-0.2 | +0. | +5.3 | -2.2 | -2.6 |
^next^
For Active
Traders
It was a good trading day in the major
indices,
as there was a good discount opening in the casino, with the
(
SPY |
Quote |
Chart |
News |
PowerRating)
opening
down at 112.02 from the previous 112.78 close. The contra move up to 112.40
gave
you a short entry at the 240 EMA and below all of the EMAs. It traded down
to
111. This decline also had the SPX down to its intraday low of 1106.30 vs.
the
1107 2.0 volatility band, which was a good entry level. The SPY traded up to
112.09, closing at 111.81, and the SPX traded up to 1116.20. Nice move if
you
caught it. If you are versed in the first-hour strategies and volatility
bands,
you had an excellent day from both the long and short side, and actually two
longs if you played the long side off the discount opening.
The QQQs were actually a better setup with
more
definition. First, there was the discount opening to 35.24, -0.8%, vs. the
+0.8%
up day on Wednesday. It hit a 35.17 low on the second bar, closing at the
top of
its range on volume. The sequence traders were all over this one based on
the
e-mails I’ve received. The 1.0 volatility band was 35.09, 1.272 extension of
Wednesday’s last leg up was 35.19, and the entry above the 35.24 high of the
second bar was an RST entry. This ran to the 240 EMA at 35.44, which was a
gap
pullback setup, and taken, because breadth was over -1500 at the time and
not
really improving and it was a case of rising price without commensurate
volume.
The decline from there went down to 34.86,
right
at the 34.85 1.5 volatility band and just above the 200-day EMA of 34.73.
This
brought in some buying, but it was also an RST long entry setup with entry
above
34.95, which ran to 35.36, closing at 35.26. There was no surprise to any of
these trades if you have my seminar/module material and will all be covered,
and
then some, in the June 25 – 27 seminar at the Waldorf Astoria in New
York.
Today’s
Action
It’s amateur time today with the jobs report
at
8:30 a.m. ET, but for sequence traders, that usually means excellent
opportunity
on the overreactions either way. If it is down on the opening and you play a
contra move, be ready for a reversal in the direction of the open due to the
recent weak market action. If the QQQs break the 34.73 200-day EMA and 34.72
04/30/04 low, the hedge funds will accelerate a quick air pocket. I have
given
you the zones below 34 in previous commentary.
Have a good trading day and have a great
weekend.
Kevin Haggerty