No Edge Here For First Time Buyers
What Friday’s Action Tells You
The SPX made it nine straight up-days off the
1090.19 key price and time zone and accelerated further with the election
results, Generals’ November new money and probably the mutual fund market timers
were forced to jump in. Keep in mind, the move off the 1090.19 price and time
zone carried to 1141 before the election, so the election result just
accelerated even more, in addition to trading through the 1144.94 high monthly
close for 2004 and then the intraday 2004 high of 1163.23.
NYSE volume was 1.73 billion with volume ratio of
65, but the breadth was -5, which obviously highlights the herd mentality, with
more volume chasing fewer big cap stocks as sector focus narrows. In fact, the
primary sectors were led for the week by CYC, +5.7%, RTH, +5.6% and XBD, +5.7%.
In-line with the cyclical gain was the -1.1% decline on Friday by the TLT which
should be no surprise in light of the cyclicals’ advance.
However, the high weekly sector gainer was the
BBH, +7.2%, and has made a +13.6% move in 10 days off an extended 9-month
standard deviation level from an RST pattern (covered in
seminar material).
The short-term condition is overbought with the 4
MA of the volume ratio now 70, 5 RSI 93, and 4 MA of breadth at +959. There is a
confluence of sequence from 1169.50 -1174, including the extended 9-month
standard deviation zone. After nine straight up-days, first time buyers have
no edge.
Active Traders
The SPX traded right up to 1170.87 on the 10:30
AM Bar with the 1.28 volatility band at 1171.04. Trap Door entry was below
1169.59 and the trade carried down to 1161.52 before any need to coverÂ
After a tick up to 1164, it hit its intraday low of 1160.36 at the 60 EMA (5
minute chart) then traded back up into the 1166.17 close.
The SMH had rallied up to 33.17 (1.5 volatility
band, 33.21) before declining to 32.64 and closing at 32.88.
For Today
Price is stretched short-term for the major
indices, especially the SPX. This is the first attempt taking out the
1163.23 magnet high and also 1161, which is the .50 retracement to 1553 from
769. It is short-term overbought after nine straight up-days, with the move from
1141 to 1170.87, so expect some retracement below 1163 and then we will find out
about any fifth leg up for the bull cycle up which started in October 2002 off
the 769 low.
Intraday bias this week is to the short side into
any early strength and there is a minor time zone entering mid November so a
quick sell-off should not be a surprise right here.
Have a good trading day
Kevin Haggerty
P.S. Trade with me for a year.
Click here.
