Not A Bad Day
After
the first bar down to 828.37 for the SPX
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failing to take out the 826.95 low from Friday, which would have been a 1,2,3
intraday short entry, the SPX rallied up to 844.39. This took out Friday’s high,
and it reversed down the very next bar. Fact is the SPX only sold down to 835.51
before closing up at 841.44. This is the second bump against the 844 .38
retracement level to the 965 high. It was a narrow-range day compared to
Thursday and Friday, closing in the top of the range +0.7% on the day. The Dow
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closing at 1221. The SOX and
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PowerRating)s were essentially unchanged.Â
NYSE volume dropped off
to a holiday 1.1 billion, or 20% below average. The volume ratio was neutral at
56, as was breadth at +6. All in all, not a bad day in light of Thursday and
Friday gains, in addition to the current news. Today is a busy earnings
announcement day, including many of the banks, and Intel
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PowerRating), which
comes after the close. Many of the semis traded significantly lower volume
yesterday, so there was neither buying nor selling pressure.Â
We have option expiration
this Friday, which is also a minor cycle date, with a major cycle date next
Monday. That means volatility. The short direction remains up until there is
close below the low of the high day, and based on the big green in this
morning’s pre-opening futures which have the Dow +170, the S&Ps +23 and
Nasdaq +27, today will certainly be a higher high than yesterday.Â
If there is continuation
strength into the Monday cycle time before a pullback, the SPX could extend this
move to the 50-day EMA zone at 869, in confluence with the .50 retracement to
965 from 769, which is 867. The 50-day EMA for the Dow is 8188, the Nasdaq 1261
and the SMHs 22.85.Â
For those of you who took
the trade in the high-probability zone, which I would bet is not more than 10%
of you, the decisions are easy. For you debaters, media followers and commentary
addicts that missed, then reality should be intraday trades with tight stops and
anticipating a pullback, so flat at the end of the day is better. There will be
another position setup opportunity that is defined on the daily/weekly charts
where you will get a chance to make another decision regarding a position or
swing trade after the pullback, or even a new low if that happens. The question
is if you didn’t take the initial long trade from the zone, will you take the
short entry on a retracement to the declining 50-day EMA or even a re-cross of
the 20-day EMA to the downside with tight stops right above. If your answer is
no to this also, then you can easily identify your problem.
Have a good trading day.
Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Monday’s NYSE TICKS