Prepare It And Execute It
The
scorecard read SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) +1.4%, Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +1.0%, NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) +1.3%, and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
+1.1%, or +96 points. Once again, almost all of the move was in the last hour
with a sudden burst in the futures at 3:00 p.m. due to program trading. The Dow
is at 9,000 with CNBC beating the “possible above 9,000 close” routine
to death, of course making it a magnet. The Dow gained 77 points from 3:00 p.m.
to 3:30 p.m., then closed at 9057. The .618 retracement to the 10,349 high is
9273, the .50 is 8941, and the 89-day EMA is at 9200. This comprises the high
end of resistance along with some trading range congestion around those levels
that you see on your daily chart.
NYSE volume was just
below average at 1.37 billion and has yet to trade above its average volume on
this move from 8700 to yesterday’s close. In fact, if you check the
(
SPY |
Quote |
Chart |
News |
PowerRating)
volume over the last five days, you’ll see that it’s the lightest of the entire
rally. The volume ratio was 77, and breadth was +909.Â
There was a different
sector mix yesterday, as the SOX
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) popped +4.7% and the DRG
(
$DRG.X |
Quote |
Chart |
News |
PowerRating) was +2.7%. The SOX is still holding its gains of the past two
weeks and only backed off 1.2%. The major indices are in their fifth straight up
week with program trading as a percentage of NYSE volume at the highs once
again, and the highest this year. Short-term position strategy in this corner is
a 1,2,3,4 unit scale-in short which started at the September low, which is 945
on the SPX. This is opposite the IRA scale-down long which has already been
accomplished down through the 776 level.
What’s your plan? Do you
have one? How will you implement it? If “no” to these questions, then
you’re another in the legion of traders/investors that deserve the “no
decision” market commentary that is prevalent most of the time. Prepare it
and execute it. When it looks perfect, it’s not. Did you hear from Abby Cohen or
any of the other portfolio strategists at the extreme bands? Not a chance. But
they all come out of the woodwork at highs or extreme levels, which are not good
entries. Do your own work.Â
Have a good trading day
and have a great weekend.
Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Thursday’s NYSE TICKS