Range Resolution
The
wrong gang showed up yesterday afternoon.
The
(
SPY |
Quote |
Chart |
News |
PowerRating)s opened up +0.6% with the
intraday high on the opening bar of 90.90. The 89-day EMA is 90.75. The intraday
high for the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was 902.94, which is right in the zone of the
various confluence of numbers that I have mentioned several times over the last
few days. It was sideways action after that forming a large symmetrical triangle
on the five-minute chart for the SPX. The breakout to the downside from the
triangle, and also below the 8-, 20- and 60-period EMAs, was right on the 1:45
p.m. ET key program time for the SPX. It was a straight move down to the
intraday low of 879, closing at 882.13. The index is in a four-day range with
all of the opens and closes for the past three days within the range of the Oct.
21 wide-range bar up. Rounded off, it’s a 903 – 873 range. That will be resolved
shortly.
I use the SPX as an
example in my commentary because it’s better to take a futures position off an
SPX cash setup. It takes capital to move the cash index, but the futures can be
jiggled on nothing and results in too many false starts. The futures will most
often lead because of the programs, but you must watch both together, i.e., if
the premium expands but the cash doesn’t budge, you must be careful. And if it
shrinks with the SPX holding firm and other market dynamics are not
deteriorating, it usually means the Generals are on the floor and the rabbits in
Chicago, or small programs, can’t move the SPX cash index down with all the
jiggles. It’s not enough to say that premium is expanding or shrinking.
Professionals look for confirmation from the SPX cash, and so should you. I also
trade the SPYs off the SPX cash setups. Try it. You will see how many false
starts you avoid.
I see today’s disaster is
Cigna
(
CI |
Quote |
Chart |
News |
PowerRating) following up on
(
TXN |
Quote |
Chart |
News |
PowerRating), not to mention
(
INTC |
Quote |
Chart |
News |
PowerRating). They all
have been making good upside reflexes after settling a few days — intraday
trades only, though. The psychology of the crowd is an asset to traders. All
major sectors were red yesterday, and the green was mostly in the dogs like
(
LU |
Quote |
Chart |
News |
PowerRating),
(
NT |
Quote |
Chart |
News |
PowerRating),
(
AWE |
Quote |
Chart |
News |
PowerRating) and
(
GLW |
Quote |
Chart |
News |
PowerRating). The average price of all four
together is 2.625. All of this junk action had the network index, which is the
NWK, +7.7%, and the telecom index +3.3%. Then you can throw in
(
TYC |
Quote |
Chart |
News |
PowerRating) and
(
AOL |
Quote |
Chart |
News |
PowerRating). It was not exactly a blue chip day for green.
For today, the futures
are quiet as I do this at 8:10 a.m., not a surprise after the SPX has gone up,
down, up, down for the past four days. The empty media suits don’t know whether
to bring in the bull drones or the bear drones. For daytraders, there is a much
better edge in this four-day range. You get to play any reflex from this low
end, but are ready to double up and reverse if we go the other way.
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