Market Extended, But The Game Can Carry Through
What
Monday’s Action Tells You
“There’s a party going
on out there” as the Generals and hedge funds are trying to maximize
their 2003 returns and it didn’t take much volume to get it done yesterday.
All the major indices were up, led by the Nasdaq and QQQs, +1.7%, playing catch
up with the Dow and SPX. It took the run-off until just after 4:30 PM to get
the NYSE volume above 1 billion, finishing at 1.06 billion. I take the volume
number at 4:30 PM ET for the table to account for the run-off volume, so if
you have numbers you use at 4:00 PM that’s why there can be a noticeable difference
at times The volume ratio was all one-sided at 90 and a 4-day moving average
of 66 from the shortened low-volume week, and this can remain short-term overbought
through the first week or so of 2004 as new money gets put to work. Breadth
was +1760, the most since the table started for the week ending 10/31. The 4-day
moving average is very short-term overbought at +907. All major sectors closed
green. No surprise with the SMH +2.3% and XBD +2.2%
| size=2> |
Tuesday
12/23 |
Wednesday
12/24 |
Thursday
12/25 |
Friday
12/26 |
Monday
12/29 |
| color=#0000ff>Index | |||||
| color=#0000ff>SPX | |||||
| color=#0000ff>High |
1096.95
|
1096.40
|
H
|
1098.47
|
1109.48
|
| color=#0000ff>Low |
1091.73
|
1092.73
|
1094.04
|
1095.89
|
|
| color=#0000ff>Close |
1096.02
|
1094.04
|
O
|
1095.89
|
1109.48
|
| color=#0000ff>% |
+0.3
|
-0.4
|
+0.2
|
+1.2
|
|
| color=#0000ff>Range |
5.2
|
3.7
|
L
|
4.4
|
13.59
|
| color=#0000ff>% Range |
83
|
35
|
42
|
100
|
|
| color=#0000ff>INDU |
10341
|
10305
|
I
|
10325
|
10450
|
| color=#0000ff>% |
+.03
|
-0.4
|
+0.2
|
+1.2
|
|
| color=#0000ff>Nasdaq |
1975
|
1969
|
D
|
1973
|
2006
|
| color=#0000ff>% |
+1.0
|
-0.3
|
+0.2
|
+1.7
|
|
| color=#0000ff>QQQ |
35.86
|
35.90
|
A
|
35.85
|
36.46
|
| color=#0000ff>% |
+0.8
|
+0.2
|
-0.1
|
+1.7
|
|
| color=#0000ff>NYSE |
Y
|
||||
| color=#0000ff>T. VOL |
1.15
|
517
|
358
|
1.06
|
|
| color=#0000ff>U. VOL |
707
|
224
|
241
|
947
|
|
| color=#0000ff>D. VOL |
423
|
279
|
108
|
104
|
|
| color=#0000ff>VR |
62
|
44
|
69
|
90
|
|
| color=#0000ff>4 MA |
66
|
56
|
61
|
66
|
|
| color=#0000ff>5 RSI |
83
|
76
|
78
|
88
|
|
| color=#0000ff>ADV |
2043
|
1613
|
1983
|
2533
|
|
| color=#0000ff>DEC |
1193
|
1494
|
1084
|
773
|
|
| color=#0000ff>A-D |
+850
|
+119
|
+899
|
+1760
|
|
| color=#0000ff>4 MA |
+848
|
+474
|
+672
|
+907
|
|
| color=#0000ff>SECTORS | |||||
| color=#0000ff>SMH |
+1.9
|
-0.2
|
0
|
+2.2
|
|
| color=#0000ff>BKX |
+0.1
|
-0.2
|
+0.2
|
+1.0
|
|
| color=#0000ff>XBD |
+0.6
|
-0.5
|
+.04
|
+2.2
|
|
| color=#0000ff>RTH |
+0.1
|
-0.3
|
+0.6
|
+1.1
|
|
| color=#0000ff>CYC |
+0.2
|
-0.2
|
+0.5
|
+1.3
|
|
| color=#0000ff>PPH |
+.09
|
+0.5
|
+0.1
|
+1.0
|
|
| color=#0000ff>OIH |
-1.9
|
+1.4
|
+.06
|
+0.7
|
|
| color=#0000ff>BBH |
+0.9
|
+0.4
|
-.30
|
+0.4
|
|
| color=#0000ff>TLT |
-1.1
|
+0.9
|
+0.4
|
-0.9
|
|
| color=#0000ff>XAU |
+0.8
|
+0.4
|
+2.5
|
+3.2
|
It’s no accident seeing that the SMH was +158%
and XBD +110% from the 10/02 lows as of the week ended 12/26. Both of these
are two of the top three performers in the bull market so far. The XAU (gold
) was +3.2% following a +2.5% on day Friday — just happening to coincide with
the elevated terrorist situation.
We never did hear the result of that investigation
into the significant equity put buying just prior to 9/11, with the long side
being oil. Funny how that happens — and yet the prosecutors are all over Martha
Stewart for a few hundred grand. It’s kind of like Hillary Clinton turning $5000
into $100,000 in the commodity market with what must be an “all world money
manager.” Right! It’s year end — what can I tell you — time for a break.
For Active Traders
It was up, sideways, and up yesterday, with the
obvious last hour markup that took the SPX up 5.4 points, from 1104.11 to the
1109.48 close. After the gap-up opening move, the SPX pulled back to the opening
level and if you traded the SPY, that was the 110.10, which was also the 60-EMA
(5-minute chart). There was a wide-range bar Kings and Queens reversal entry
pattern on that contra move down and from that 110.10 retracement, traded up
to 111.27, closing at 111.16. There was also a Slim
Jim entry to new intraday highs above 110.50 on the 1:20 PM bar and there
was no threat of getting stopped out on the trend up from there.
Net net, for those of you who have my
methodology, the 90-60 rule was the game. You had the gap opening up, contra
move down, and price resumed the direction of the open, and in yesterday’s case
it was an extended move relative to the SPY or futures, whichever one you traded.
Going into yesterday, I said the QQQ and the XLK
were my choices if the Generals showed up because of the significant weekly
trading range positions. The QQQs were essentially in 36-34 box for the past 12
weeks, so that play was made yesterday and was kept in position for a short-term
trade because the QQQs closed at 36.44, +1.7% on the day. There was a similar
trade with the XLKs, which closed at 20.44, +1.8%.
Most all market and sentiment indicators are very extended and the game can
carry over through early January before the inevitable air pocket, hopefully
from higher levels. The Nasdaq closed at 2006.48, above both its previous
2001.94 intraday high and last week’s high close of 1973.14. Just like the QQQs,
the Nasdaq has been trading in a narrow 1973 -1866 box on a closing basis for
the past 12 weeks, so maybe the low-volume breakout will suck momentum money in,
which will set up excellent opportunities regarding some some options strategies
both for protection and a less aggressive approach to capture longer-term
position returns in 2004.
The next commentary will be on Monday 1/5, but I will include some charts on
Wednesday and Friday which will be used in conjunction with the 2003 year-end
summary and some thoughts for 2004.
Have a very safe and Happy New Year!
Kevin Haggerty
