Key price and time zone initiated
The key price and time zone was
initiated at the SPX 1273 level (see the 12/5
commentary) on Tuesday, with the SPX making a 1250.91 intraday low yesterday. Momentum
divergence had preceded the reversal–which is expected to be of short
duration–with the bet that the Generals and hedge funds will play their mark-up
game into the last two weeks or so of the year. Of course, that is widely
expected. The Dow, which did not make a marginal new high on Tuesday (12/6)
unlike the SPX, has declined 230 points high-to-low before closing at 10,755
yesterday, -0.5%. The SPX was -0.1% to 1255.84. The reversal from the
10,960 intraday high on 11/29 is eight days today. GM, INTC and IBM led the Dow
down yesterday. The constant INTC fire drill kicked in after the close, with a
lower revenue forecast followed by a -3% decline on 8.3 million shares in
extended trading, while AMAT was -2.2% on just 1.2 million shares, also on the
most active extended hour list. Each time we go through this INTC drill, price
usually reverses soon after the “worst and better than noise.” The S&P futures
are flat as I do this at 7AM ET, so there is no downside futures game in play
yet , but we are hoping for one, so as daytraders we can play the initial early
conta-move. In the sectors, semiconductors led the downside yesterday with the
SMH -2.1%, while energy was the leader again with the OIH +3.1% and XLE +1.8%.
Short-side continuation was in play yesterday when the SPX
1258.12 (12/5) low was taken out on the downside reversal from the 1263.36
intraday high. The 1249.39 low following the 1270.64 high held and is the
obvious downside magnet which, if taken out, would put the RST in play. The
first measured retracement zone is 1235 -1230. If that downside fails to
materialize, then it remains daytrading as usual and no short-term long index
proxy position would be taken.
Have a good trading day.
Kevin Haggerty
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