ISM This!
Lots
of pre-opening noise in the futures yesterday,
which is not the Generals buying stocks,
carried over as the early gap up carried to a 954.28 intraday high for the SPX
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PowerRating) on the 10:00 a.m. ET bar. That was a wide-range reversal bar on
the relatively insignificant ISM number announcement, so the early futures game
ended right there. The 1.5 volatility band yesterday was 954.62. Excuse me,
didn’t we just get a revised 4.0% GDP number, durable goods pick-ups, jobless
claims improving, etc.? Yes, we did, but then a manufacturing number drops the
futures a quick 20 points. Manufacturing is not a significant part of the
economy anymore, but it was enough for the gang to attack the futures after the
artificial move up to 954.28 on the SPX in the first 30 minutes. CNBC continues
to prove why its ratings are dropping like a rock.
The first rally attempt
came from the 933.80 level vs. the 1.618 Fib extension of the first leg up at
933.71. The .50 retracement to Tuesday’s 912.10 low was 933.19, and it was also
at the 260 EMA level on the five-minute chart. Three reasons why one should look
for a possible reversal. This rally ended at 940.15 and that took an hour and 45
minutes just to get that far. The next leg down after a re-cross of the 260 EMA
to the downside ended at the intraday low of 927.72 before the next up move. The
.618 retracement to that same 912.10 low was 928.21. There was a reversal bar
long entry above 928.92 on the SPX that carried up to 936 before closing at
933.80, virtually unchanged on the day at -1.8 points, or -0.2%, but certainly a
lot of noise on each side of that closing number.
The choppiness was
further evidenced by the Dow
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PowerRating) ending -0.4%, while the Nasdaq
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and NDX 100
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PowerRating) each finished the day +0.4%. NYSE volume was 1.55
billion, a volume ratio still positive at 56, and breadth +397, in addition to
some sectors, like the SOX, BTK, RLX, OSX and XTC, which all remained green.
If the major indices go
south early today, I look for the first reversal opportunity to come from the
923 – 925 zone. 925 is the .38 retracement between 1177 and 769. 924 is the .50
retracement to the 1990 low from the all-time 1553 high. 923 is the 1998 bear
market low, and is also the .786 retracement between 965 and 769. This just
means that there is an awareness zone in play again, which puts you on alert for
intraday setups at this zone and nothing more. Above the 933.80 SPX close, the
938 – 946 resistance is back in play again. There is considerable event risk at
these extended levels for the major indices, and certainly the SOX, where many
of the shorts have covered. As I have mentioned several times, it must be the
Generals’ new monies this week and/or bond-to-stock swaps to hold this market or
push it into the upper resistance zone through the August 965 high before a
needed pullback starts.
Have a good trading day.
Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Monday’s NYSE TICKS