Let The Market React
After
all was said and done last week,
the S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
finished exactly even on the
week, while the Nasdaq
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) gained 1.7%, and the Dow
(
$DJX.X |
Quote |
Chart |
News |
PowerRating)
lost just 11 points. The New York Stock Exchange volume expansion for the last
three trading days averaged 54% above normal, while the Nasdaq’s volume was just
10% above its average.
That points out the S&P
programs and rebalancing that went into the six-month report card. It was
certainly a trader’s week as the travel range was outstanding, thanks, in part,
to the hysterical media stoking the emotional fires, enabling the program gang
to accelerate the moves in both directions.
In the sectors, the
Semis actually ended positive with the
(
$SOX.X |
Quote |
Chart |
News |
PowerRating)
+2.2% on the week, while the rush to gold
wasn’t in, but out — as the
(
$XAU.X |
Quote |
Chart |
News |
PowerRating)
finished the week -8.5%. The biotechs, with
short covering, ended with the
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) +3.5% on the week. The
(
$XBD.X |
Quote |
Chart |
News |
PowerRating),
which is the brokers index was +4.6% with
the bank index
(
$BKX.X |
Quote |
Chart |
News |
PowerRating) finishing flat. The oil service
index
(
$OSX.X |
Quote |
Chart |
News |
PowerRating) lost 5% on the
week, while retail
(
$RLX.X |
Quote |
Chart |
News |
PowerRating) was
slightly positive on the week.
With the holiday on
Thursday, we must anticipate any July seasonal/pre-holiday bias as up, but only
if you get some intraday long setups. The market is running around with its head
cut off and changes by the hour, so that’s how you must trade it. The potential
for a big air pocket down is high after the holiday.
I was very explicit last
week on my downside preparations so there must be more heavy emotion to get down
to new lower levels, before any action is taken. Many of the non-index stocks
have held up above the lines, as 57% of NYSE stocks are still above their
200-day moving averages, but the major indices tell you something else: Only 36%
of the SPX stocks are above their 200-day moving average, just 15% for the NDX,
and 20% for the Dow.
My strategy remains the
same: Stay with the index proxies/futures and also the HOLDRs. Let the market
react, then we can respond to the overreactions — that continues to produce the
best trades. After the rebalancing for June, no setups have any real validity on
a carry over from Friday.
Have a good trading day.
Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Friday’s NYSE TICKS