Key Time Period This Week
What Friday’s Action Tells
You
The major indices made the move to new highs
on
Friday with the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closing at 1222.12, +1.0%, having hit an
intraday high of 1224.76. Until Friday, the SPX was flat on the week and
finished+1.0% due to Friday’s gain. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed at 10,941,
+1.0%, and +0.9% on the week. The Dow Transportations and Utilities
confirmed,
also closing at new highs. The
(
IWM |
Quote |
Chart |
News |
PowerRating), the Russell 2000, has not made new
highs as of yet, closing at 128.69 vs. the 130.66 12/31/04 high. On the
other
hand, the
(
QQQQ |
Quote |
Chart |
News |
PowerRating)s are nowhere and still can’t get past the 37.50 – 38
resistance.
The smokestacks are leading the way with the
XLB
continuing to make new highs at extended levels with stocks like
(
DOW |
Quote |
Chart |
News |
PowerRating)
+3.0%
on Friday and
(
DD |
Quote |
Chart |
News |
PowerRating) +2.7%. Actually, the New York Composite (NYA) has been
the
major index leader all along, having made new highs in mid-February above
7273
and closed Friday at 7441. All of the major indices, except the QQQQ and
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating), are above their rising 10-, 20-, 50- and 200-day EMAs, so
that
speaks for itself until something changes. The most extended long-term
conditions remain in the energy and commodities, as evidenced by the Oil and
Gas
index and $CRB, both out beyond their 2.0 standard deviation longer-term
bands.
The
(
SPY |
Quote |
Chart |
News |
PowerRating) gapped open on the jobs dance
on
Friday, opening at 122.05 vs. a 121.22Â previous close. This was at the
122.04 1.0 volatility band and a
Trap Door short was taken below 121.96
which
only traded to 121.80 and then resumed the direction of the open, with the
SPX
taking out the 1217.90 high on the 9:55 a.m. ET bar. The SPY hit a 122.55
high
on the 10:20 a.m. bar, setting up the second RST entry below 122.35 which
only
traded back to 122.04 before going trend up again into the 122.73 close. The
(
SMH |
Quote |
Chart |
News |
PowerRating) gapped open to a 34.28 high on the first bar from the previous
close
of 33.93. The contra move reversed to 33.77 by the 9:45 a.m. bar and then
reversed again to 34.46 and then back to 33.83, finally closing at 34. You
can
bet there were lots of hedge fund agendas in that kind of erratic market
action.
With the
(
TLT |
Quote |
Chart |
News |
PowerRating)s up +1.1% on Friday, the
focus
list stocks that made strong moves were the homebuilders and
brokers.
Coincident with Friday’s rally to new highs
above
SPX 1220, the initial reduction of longer-term equity exposure on a scale-up
basis commenced. The SPX is now +59.3% low-to-Friday’s-1224.96-high.
Many traders hesitate as they adjust to new
levels, but daytraders this week should play the short-side setups just as
they
will the long. Don’t hesitate because of the new highs. If any overreactions
carry over this week, continue to take Trap Door shorts, especially at
volatility band levels.
The
(
DIA |
Quote |
Chart |
News |
PowerRating)s closed at 109.54 with a 109.61
intraday high on Friday. There are three sequence numbers (60-minute chart)
at
109.41, 109.78 and 110.34, so focus on the price action on five-minute
charts
for reversal setups. Pullbacks to the new-high breakout levels are the
obvious
zones for any decent buy setups. There is more DIA Fib time sequence on the
weekly chart. This coming week is the 55th week from the 2/16/04 week high of
105.98. Last week was the 55th week from the 2/9/04 week high close. Last
week
was also the fifth week up from the Jan. 24 week low, the start of this
rally.
For a drill, take your weekly charts out and do some Fib time counts with
the
Dow/DIA, and you will see almost all of the key market highs and lows are on
Fib
series numbers.
This is being done Sunday for
Monday.
Have a good trading day and have a good
week,
Kevin Haggerty