Look At This Gift To Traders
What Thursday’s Action Tells
You
The elevator went up yesterday, with the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) having rallied from a re-cross of the 20-day EMA on
Wednesday,
which is now 1058.36, to a new rally high close yesterday at 1071.21, +1.2%,
just above the Dec. 1 1070.12 wide-range-bar close and above the last eight
days’ trading range. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating), which has been fueled by the
cyclicals and hasn’t been below the eight-day MA during this same eight-day
trading range, also closed at a new high of 10,008, +0.9%, and right at the
10,011 .618 retracement to the 11,750 all-time high from the 7197 October
2002
close. This is second time through the round number that the TV media has
been
salivating ever since the Dow traded above 9900, so maybe they will switch
to
some other cliché and give us a break.
Technology had a good bounce yesterday,
having
been more oversold than the SPX and Dow. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was
+2.0%,
the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s +2.1%. The major sectors all outperformed the SPX and Dow,
except
the BKX at +0.8% and OIH -0.3%, but our swing trade entry stocks,
(
APA |
Quote |
Chart |
News |
PowerRating)
and
(
UCL |
Quote |
Chart |
News |
PowerRating), have had good six- to seven-day runs, with APA gaining +8.3% and
UCL
+9.3% from entry to highs. One-half of each position was taken off the table
with tight stops on the balance. The other selection was
(
MUR |
Quote |
Chart |
News |
PowerRating) and is up
only 2.5% so far after the flag breakout, but the stop has now been moved to
breakeven. All three stocks were flag breakouts.
APA was the dominant selection of the three,
as
it was what I describe as “ROOFERS” in the seminar manual, and the
flag pattern
was a retracement and breakout continuation to new all-time highs. The other
factors in the trade selection were the natural gas play and December energy
bias. I repeat: The best daytrading ideas are generated from the higher
timeframe patterns, so it doesn’t matter whether you are a position trader
or
daytrader, you go through the same drill in preparing for the next
day.
| size=2> |
Friday
12/5 |
Monday 12/8
|
Tuesday
12/9 |
Wednesday
12/10 |
Thursday
12/11 |
| color=#0000ff>Index | |||||
| color=#0000ff>SPX | |||||
| color=#0000ff>High |
1068.41
|
1069.59
|
1071.94
|
1063.02
|
1073.63
|
| color=#0000ff>Low |
1060.21
|
1060.93
|
1059.16
|
1053.41
|
1059.05
|
| color=#0000ff>Close |
1061.50
|
1069.20
|
1060.18
|
1059.05
|
1071.21
|
| color=#0000ff>% |
-0.8
|
+0.7
|
-0.9
|
-0.1
|
+1.2
|
| color=#0000ff>Range |
6.9
|
8.7
|
12.8
|
9.6
|
14.6
|
| color=#0000ff>% Range |
19
|
95
|
8
|
59
|
83
|
| color=#0000ff>INDU |
9863
|
9965
|
9923
|
9922
|
10008
|
| color=#0000ff>% |
-0.7
|
+1.0
|
-0.4
|
-.02
|
+0.9
|
| color=#0000ff>Nasdaq |
1938
|
1949
|
1908
|
1905
|
1942
|
| color=#0000ff>% |
-1.6
|
+0.6
|
-2.1
|
-0.2
|
+2.0
|
| color=#0000ff>QQQ |
35.05
|
35.26
|
34.43
|
34.56
|
35.27
|
| color=#0000ff>% |
-1.6
|
+0.6
|
-2.3
|
+0.4
|
+2.1
|
| color=#0000ff>NYSE |
|
|
|
|
|
| color=#0000ff>T. VOL |
1.22
|
1.19
|
1.42
|
1.41
|
1.44
|
| color=#0000ff>U. VOL |
370
|
738
|
410
|
515
|
1.23
|
| color=#0000ff>D. VOL |
830
|
438
|
999
|
880
|
185
|
| color=#0000ff>VR |
31
|
63
|
29
|
37
|
87
|
| color=#0000ff>4 MA |
42
|
47
|
43
|
40
|
54
|
| color=#0000ff>5 RSI |
53
|
64
|
47
|
45
|
85
|
| color=#0000ff>ADV |
1437
|
2157
|
1285
|
1277
|
2479
|
| color=#0000ff>DEC |
1787
|
1088
|
1994
|
2025
|
795
|
| color=#0000ff>A-D |
-350
|
+1069
|
-709
|
-748
|
+1684
|
| color=#0000ff>4 MA |
-159
|
+113
|
-7
|
-185
|
+324
|
| color=#0000ff>SECTORS |
|
|
|
|
|
| color=#0000ff>SMH |
-3.6
|
-0.2
|
-4.2
|
+1.2
|
+2.5
|
| color=#0000ff>BKX |
-0.9
|
+1.3
|
-1.3
|
-0.3
|
+0.8
|
| color=#0000ff>XBD |
-1.4
|
+1.1
|
-1.8
|
-1.1
|
+1.7
|
| color=#0000ff>RTH |
-0.9
|
+0.1
|
-1.1
|
-0.6
|
+1.3
|
| color=#0000ff>CYC |
-1.0
|
+1.3
|
+0.2
|
-1.1
|
+1.5
|
| color=#0000ff>PPH |
-0.5
|
+0.9
|
-0.5
|
-0.5
|
+1.4
|
| color=#0000ff>OIH |
+2.3
|
+0.1
|
-0.3
|
+0.4
|
-0.3
|
| color=#0000ff>BBH |
-0.8
|
-0.1
|
-0.7
|
-0.4
|
+1.5
|
| color=#0000ff>TLT |
+1.6
|
-0.7
|
-0.7
|
+0.2
|
+0.7
|
| color=#0000ff>XAU |
+1.8
|
-0.3
|
-2.9
|
-4.4
|
+2.9
|
For Active
Traders
From a trading standpoint, it was straight up
for
the SPX yesterday morning from the previous day’s 1059.05 close to the 1068
level by 10:30 a.m. ET, which is the .382 retracement to the 1553 all-time
high
from 769. Price ranged out around the 1068 level until the breakout on the
2:10
p.m. bar, carrying the SPX to a 1073.63 intraday high and 1071.21
close.
If you played the Slim Jim breakout, you picked up a few E-mini
points.
However, the best trade was in the
(
SMH |
Quote |
Chart |
News |
PowerRating),
and
that was a primary focus from yesterday’s commentary. I have included the
SMH
five-minute chart which shows the SMH gift to traders, which was the
trade-through entry (3) on big volume above the previous day’s range. The
SMHs
opened at 39.80 (1), traded to 39.73 on the 9:35 a.m. bar (2), then broke
out
above the 39.92 range top on the third bar. This trade ran to 40.67 by 10:30
a.m., which is where the chart ends (in order to show clarity), but there
was
more to come. By 11:00 a.m., after no real pullback, the SMH had traded to
the
50-day EMA, which is now 40.75, then went sideways until a 2:15 p.m.
breakout of
the range took it to a 41.05 high, closing at 40.95. There was significant
volume the past two days, and remembering your volume principles, narrowing
range on a significant increase in volume usually precedes a change in the
existing trend, which in this case was the seven-day decline from the SMH
double
top at 44.39, the first top being the 44.70 top on Nov. 7.
The narrow-range day Wednesday was only a .85
range, but volume was 18.4 million shares, the second biggest day since this
rally started in February 2003, which was the retracement to the October
2002
lows. You were prepared in the 39.10 – 38.50 zone, and then yesterday’s no
brainer on the 39.92 breakout was a nice bonus. Yesterday’s volume was 16.3
million shares on the continuation, and now price is back to the 41.10
trading
range lower boundary and just above the 50-day EMA of 40.75. Needless to
say,
based on a level and volume these past two days, the SMHs, or individual
semi
stocks, should remain your primary daytrading focus.
Also, don’t forget
(
GE |
Quote |
Chart |
News |
PowerRating) which had a nice
day
yesterday at +2.2%, and
(
MSFT |
Quote |
Chart |
News |
PowerRating) only +0.1% yesterday, as it churns at
the
50-day EMA. Trust me when I say the Generals will be involved big time in
these
stocks through year-end.
Have a good trading day,
Kevin Haggerty
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