News-Driven Market Strategy
Yesterday started out with some promise,
as there was a good gap pullback trade
from the 20-period EMA on your five-minute charts for both the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating). The
(
QQQ |
Quote |
Chart |
News |
PowerRating)s which had better relative
strength only pulled back to the 8-period EMA before advancing again. However,
it was not to be after Secretary of State Powell started talking about the UBL
tape. It was trend down after that, with the best short setups for the major
indices coming around 2:00 p.m. ET from head-and-shoulders patterns, and below
all of the 8, 20, 60 and 260 EMAs on the five-minute chart.
NYSE volume was 1.3
billion, a volume ratio of 30, and breadth -523. Both the SPX and Dow finished
red, with the SPX at -0.8% and the Dow -1.0%. There was some divergence, as the
QQQs gained 0.5% and the
(
SMH |
Quote |
Chart |
News |
PowerRating)s +0.7%.
Under the current
circumstances where every market movement is controlled by news bites, it is
obviously prudent to reduce position size and only take the best of setups. On
the stock side, I continue to look for any kind of narrow-range volatility-type
patterns that can be played in either direction. It seems to fit this news
market.
Have a good trading day.
Five-minute chart of
Tuesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Tuesday’s NYSE TICKS