No Unhedged Positions Over The Weekend
What Thursday’s Action Tells
You
The October-fiscal-year-end Funds are doing
their
thing as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1127.44, +0.2%, so it looks as if
last year’s 1111.92 close is safe into today’s last trading day of October.
The
Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was up just 3 points to 10,005, while the
(
QQQ |
Quote |
Chart |
News |
PowerRating),
36.96,
was +0.6%, and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating), 1976, +0.3%.
There are obviously some sellers taking
advantage
of the mark-up as evidenced by the rising price and declining volume ratio
and
breadth. Since Tuesday, the up volume is 1.35 billion, 1.27 billion and 852
million yesterday. Total NYSE volume yesterday was 1.63 billion with the
volume
ratio at 53. The down volume has increased over the three days from 314
million
– 458 million – 759 million yesterday. The breadth yesterday was just +144
vs.
+1320 on Tuesday and +1261 on Wednesday. The 4 MA of the volume ratio is now
64
and the 4 MA of breadth +733. This is why this ratio is so useful for
short-term
traders as it enters the short-term overbought zone at the same time you see
the
negative divergence on the up volume and breadth the last three days in
spite of
the rising index prices.
However, the election results will take
precedence over any short-term overbought or oversold condition, so you are
just
guessing by taking any unhedged positions home over the weekend, and in
fact,
that is not what high-probability trading is about.
The only significant sector action was
energy,
with the
(
OIH |
Quote |
Chart |
News |
PowerRating) -2.5%, closing at 79.50, which is -6.9% from a double top
at
85.44 and 85.12. Price has returned to the top of a tradable zone with the
50-day EMA at 79.17 and then primary support from 76.75 – 76. The
longer-term
MAs are 72.22, 72.19 and 72.11. The five-day RSI is now 30.92. Event risk
is
very high, so even a hint of trouble sends these stocks up again.
Today’s
Action
Active traders who played the
(
SPY |
Quote |
Chart |
News |
PowerRating) or
futures yesterday on the breakout of the SPX ascending triangle above 1124
caught a run to 1130.67 on the 2:30 p.m. ET bar. After that, it was right
back
to 1124.75 on the 3:35 p.m. bar and then a reflex into the 1127.44 close.
Price starts the day well above the 240 EMA
at
1117.67 and 480 EMA, 1112.66 (both on the five-minute chart).
After the two wide-range-bar days up and
yesterday’s narrow-range doji bar with the five-day RSI at 73, any
aggressive
new high trades taken today should have very tight stops. This corner has no
interest in that play on a first entry, if at all. The regulators frown on
the
last day mark-ups by the
Generals, so unless they can hide behind what can
be
construed as “positive news,” which would enable them to get
aggressive again,
it will probably be a holding action today.
I would also suggest that your trading time
today
would be better spent on individual stock setups rather than the major
indices,
unless there is some significant overreaction in price.
Have a good trading day and a great
weekend.
Kevin Haggerty
PS – Trade with me for a year.
Click here.