Price Action Benefits Daytraders
What Monday’s Action Tells
You
The market action was excellent travel range
for
the daytraders with a 2:00 p.m. ET rally from the price action zones for the
(
SPY |
Quote |
Chart |
News |
PowerRating),
(
DIA |
Quote |
Chart |
News |
PowerRating),
(
QQQ |
Quote |
Chart |
News |
PowerRating) and
(
SMH |
Quote |
Chart |
News |
PowerRating). These afternoon gains were
given
back as the intraday highs were made on the 2:45 p.m. time period with price
declining into the close. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating), led by
(
MMM |
Quote |
Chart |
News |
PowerRating) -5.5%,
finished at 10,094, -0.4%, while the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was almost
unchanged at
1100.91, -0.04%. The QQQ was -0.2% at 34.60, and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
also
virtually unchanged at 1884, +0.4%.
NYSE volume was average at 1.32 billion
shares,
with the volume ratio at 44 and the 4 MA 41. Breadth was slightly positive
again
at +198 and the 4 MA is now +125 which indicates the average stock is still
doing better than the index. The SMH and BKX were the only green at +0.6%
each,
and the brokers (XBD) closed down -1.6% after hitting an intraday low of
112.97.
It is evident that the programs are controlling the price action as the
Generals
are sitting on their hands and away from the buy trigger.
For Active
Traders
I have included the SPX, DIA and QQQ charts
because they had the best defined entry patterns, which were 1,2,3 double
bottoms in the price action zone. The SPX made a 1,2,3 double bottom at
1096.55
– 1096.68 vs. the 40-week EMA of 1096.38 and 200-day EMA at 1094.52. You got
good entry on a re-cross of the 40-week EMA above the 1097.44 high. This
trade
carried to the 240 EMA and 1105.52 intraday high where it reversed down to
an
1100.91 close. If you played the RST sell at the 240 EMA, entry was below
1103.85. The RST for the SPY was below 110.77, trading down to 110.24 and
below
1103.50 on the ESU4 which traded down to 1098.25.
The DIA made the 1,2,3 double bottom just
above
the 12-month EMA of 100.38 and then re-crossed the 200-day EMA of 101.09,
trading to 101.60, then declining to a 100.95 close. The initial 1,2,3
double
bottom entry was above 100.92, but for sure on the re-cross of the 101.09
200-day EMA.
There was the same 1,2,3 double bottom for
the
QQQ with entry above 34.55, running +1.1% from entry to the 34.97 intraday
high.
This trade ended right at the resistance of the 240 EMA and 40-week EMA at
34.94. This was also an RST sell pattern right at the resistance with entry
below 34.87, trading down to a 34.60 close.
The SMHs made a 1,2,3 lower bottom below
31.96,
trading down to the intraday low of 31.76 vs. the 31.55 .50 retracement to
the
October 2002 17.32 low. It ran +1.6% on the reversal of the 31.96 low and
closed
at 32.18. RST players should have also seen the long RST entry below 31.96,
and
there was also an RST sell pattern setup after the initial rally.
Today’s
Action
The price decline in the last one hour and
fifteen minutes put price back to the price action zones outlined yesterday,
so
that is where we start the day. The five-minute charts for the SMH, QQQ, DIA
and
SPY/futures went out yesterday with pending 1,2,3 higher bottom patterns if
we
should go green this morning. If price makes new lows, then RSTs will form
for
the QQQ below 34.48, DIA below 100.79, SPY below 110 and SMH below 31.76.
Have a good trading day,
Kevin Haggerty
