Pawns In The Game
Yesterday
started out with the expected gap-down opening for the major indices, and
then the highly probable contra move. For the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) it was a Kings
& Queens Trap Door pattern entry above 824.76. If you missed that, you got a
second chance with a 1,2,3 close entry above 823.44 on the pullback. That is
explained on the tapes
and at the seminar. The entry above 824.76 was also an RST entry, with the
“3” point occurring Monday on the 3:10 p.m. ET bar. The “5”
point was the 822.14 low on the 9:35 a.m. ET bar. (See your five-minute chart.)
The trade ran to 833.32 before reversing.Â
There was another RST buy
pattern with entry above 820.54 on the 2:35 p.m. bar, which is, of course, a
primary program time period. This rally went to an 830 high on the 3:15 p.m.
bar, which then gave you an RST sell entry below 828.17 that carried down to
817.38 on the 3:45 p.m. bar.
The Program Gang attacked
at 3:15 p.m. with sell programs, and by 3:45 p.m. the damage was done. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) declined 189 points, or -2.4%, on the day, and it lost 130 points
of that during this 3:15 p.m. – 3:45 p.m. period, closing at 7683, a new
four-year closing low. The SPX lost 14.4 points, or -1.7%, and declined 13
points during this program period.Â
In a fragile news market
like now, we are just pawns in the game as the indices can be bullied around by
the Program Gang and various other large hedge funds. When the Generals are
primarily involved on one side or the other, you don’t get the type of travel
range we had yesterday. It totaled 76 SPX points, and the sequence went -10,
+11, -13, +9, -10, +11, -12. If you keep track of travel range on various kinds
of trading days, you will develop a good feel for how to manage your futures or
proxy trades for the major indices.
The
(
SMH |
Quote |
Chart |
News |
PowerRating)s, which
diverged positively all day, finishing at +2.6%, provided several good
opportunities, as did the individual semiconductor stocks. The SMHs closed
Monday at 19.15, opened yesterday at 18.75, and hit an 18.60 intraday low all on
the 9:30 a.m. first bar of the day. They traded up +6.9% to 19.89 by the 10:20
a.m. bar. They retraced to 19.20 and then traded up to 20.13 on the 3:10 p.m.
bar before falling off with the programs, closing at 19.45. That volatility is
why we must always focus on them, and it doesn’t matter which way, long or
short, on an intraday basis. Take whatever it gives you.
There was also good
opportunity in the
(
BBH |
Quote |
Chart |
News |
PowerRating)s, which traded up from a 73.20 intraday low to a
77.49 intraday high. It was simply an excellent sequence trading day. But there
is still no Change in Direction day on the daily charts for the major indices or
the SMHs. The BBHs did put in a higher low and high with a close in the top of
the range, so they have to be on your radar again today, especially if you got
in early yesterday and carried them over with a couple of points cushion. The
SMHs are in the same category, except we didn’t get a Change in Direction day
because of the significantly low gap-down opening, but they certainly had a
positive divergence all day long, and they are again on the radar for today.
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