Opposite Day
The
SPX
(
$SPX.X |
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PowerRating) gave us a narrow-range opposite day, closing
in the bottom of its range and just below the 200-day EMA of 1166.39. It was
down 0.7% to 1164.89. The .618 retracement to the May high, and the .38
retracement to the all-time 1553 high, of 1174 and the 200-day EMA of 1174.13 is
the initial hurdle for the SPX if the rally is to extend. The 233 Fib EMA is
1186.26, and the May top last year was right at the 233-day EMA. Yesterday
was a new high day of 1176.97 with the low at 1163.55. The
Dow
(
$INDU |
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PowerRating) was -0.6% on the day, closing at 102.60.
The
(
DIA |
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above the 102 resistance on Friday and hit an intraday high of 103 yesterday,
only to close at 102.16, right back to the ascending triangle breakout point,
which is also above all of its EMAs, including the 233-day EMA. Don’t open the
door for the retracement bears yet. Pattern failure is not in play until the
DIAs reverse at about the 101.50 level. See your daily chart. We can state as
fact that the DIAs did not break out of the ascending triangle on any
significant volume, and in fact, it was a narrow-range bar breakout, therefore,
very suspect. You always want to see thrust when the Generals take the index
above a key resistance level.
The major biotechs gapped
open yesterday, but we did get trade-through entry in
(
ITMN |
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PowerRating) and
(
CEPH |
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PowerRating). The
(
$BTK.X |
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for the remainder of the session, ending -2.1%.
Overall, it was an
uneventful trading day, with only a few decent opportunities from the long side.
NYSE volume was 1.3 billion, a volume ratio of 41, and breadth -217. The
(
$SOX.X |
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Chart |
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PowerRating) declined 1.6% to 580.24, but closed above the high-day low of
576.83. There are really only two position decisions to make here: (1) Do you
buy the continuation to new rally highs, which is above 601.18, or (2) look for
setups on a pullback to the 200-day SMA of 555 and/or the 10-week EMA at 546 and
30-week at 544?
The overall market
decision is the same. All three major indices are over their rising 10-week and
30-week EMAs, so there is no significant downside market risk until price trades
below those averages. The biotechs are one example where the Generals put some
money to work on a pullback to the longer-term moving average. You certainly
want to be ready for the same in the leading groups like semis and brokers.
Looking at the sector
proxies, we see that the
(
XLB |
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PowerRating), which is the basic industry SPDR, the
(
XLF |
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PowerRating), which is the financials, and
(
XLK |
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all above their 10-week and 30-week EMAs, while the
(
XLE |
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PowerRating) and the
(
XLP |
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PowerRating),
which is the consumer staples, are below, which is about right for this bull
market rotation.
Stocks
Today
On the longside:
(
RSH |
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(
FRX |
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(
SYMC |
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(
TJX |
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(
FDC |
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(
SNPS |
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(
FITB |
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(
SLB |
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(
APA |
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(
NE |
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(
TARO |
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PowerRating) on a recross of the
200-day EMA at 35.72. Also,
(
MCAF |
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PowerRating) and
(
CACI |
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PowerRating).
In the biotechs because
of the opposite day yesterday, I’d be looking on the intraday charts to see if
the Generals show up here.
On the shortside:
(
VRSN |
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PowerRating) and
(
AVP |
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News |
PowerRating).
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
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Additional
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