Retracement Names To Add To Today’s Focus List
The major indices declined for the second
week,
with the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) -1.3% for the week vs. -0.8% the previous week.
The
lows last week were all around the 50-day EMA level after breaking the
1044 –
1063 range to the downside. After three straight down days from Nov. 14 –
Nov.
18, the four-day MA of the volume ratio was 33. The four-day MA of the
breadth
was -480 and the five-day RSI 25, so it was a short-term oversold zone.
On Wednesday, Nov. 19, after an early down to a
1034.15 intraday low, the SPX re-crossed the 50-day EMA, trading up to a 1043.95
intraday high. On Thursday, you had the terrorist opening making a 1034.34 intraday
low on the 9:45. a.m. ET bar. This was an absolute layup for daytraders, as
it again re-crossed the 50-day EMA to the upside, trading up to a 1046.48 intraday
high, which was right at the 1046.57 low close of that previous trading range.
That proved to be the wall, and this intraday high was made on the 1:00 p.m.
bar, and then it was a knife down for the remainder of the session, closing
at new lows of 1033.65.
| size=2> |
Monday
11/17 |
Tuesday
11/18 |
Wednesday
11/19 |
Thursday
11/20 |
Friday
11/21 |
Net
|
| color=#0000ff>Index | ||||||
| color=#0000ff>SPX | ||||||
| color=#0000ff>High |
1050.35
|
1048.77
|
1043.95
|
1046.48
|
1037.57
|
1050.35
|
| color=#0000ff>Low |
1035.28
|
1034
|
1034.15
|
1033.42
|
1031.20
|
1031.20
|
| color=#0000ff>Close |
1043.63
|
1034.15
|
1042.44
|
1033.65
|
1035.28
|
1035.28
|
| color=#0000ff>% |
-0.6
|
-0.9
|
+0.8
|
-0.8
|
+0.2
|
-1.3
|
| color=#0000ff>Range |
15.1
|
14.8
|
9.8
|
13.1
|
6.4
|
11.8
|
| color=#0000ff>% Range |
55
|
1
|
85
|
2
|
64
|
21
|
| color=#0000ff>INDU |
9711
|
9624
|
9690
|
9615
|
9629
|
|
| color=#0000ff>% |
-0.6
|
-0.9
|
+0.7
|
-0.7
|
+0.9
|
-1.4
|
| color=#0000ff>Nasdaq |
1910
|
1882
|
1900
|
1882
|
1894
|
|
| color=#0000ff>% |
-1.1
|
-1.5
|
+1.0
|
-0.9
|
+0.7
|
-1.8
|
| color=#0000ff>QQQ |
34.65
|
33.84
|
34.21
|
33.88
|
34.25
|
|
| color=#0000ff>% |
-1.1
|
-2.3
|
+1.0
|
-1.0
|
+1.1
|
-2.3
|
| color=#0000ff>NYSE | ||||||
| color=#0000ff>T. VOL |
1.33
|
1.31
|
1.32
|
1.29
|
1.26
|
1.3
|
| color=#0000ff>U. VOL |
236
|
392
|
845
|
361
|
729
|
513
|
| color=#0000ff>D. VOL |
1.06
|
911
|
458
|
922
|
504
|
771
|
| color=#0000ff>VR |
18
|
30
|
65
|
28
|
59
|
|
| color=#0000ff>4 MA |
47
|
33
|
37
|
35
|
46
|
|
| color=#0000ff>5 RSI |
36
|
25
|
43
|
32
|
36
|
|
| color=#0000ff>ADV |
976
|
1358
|
1938
|
1259
|
1925
|
1490
|
| color=#0000ff>DEC |
2276
|
1907
|
1298
|
2005
|
1288
|
1755
|
| color=#0000ff>A-D |
-1300
|
-549
|
+640
|
-746
|
+637
|
-1318
|
| color=#0000ff>4 MA |
+67
|
-480
|
-437
|
-489
|
-5
|
|
| color=#0000ff>SECTORS | ||||||
| color=#0000ff>SMH |
-1.0
|
-1.6
|
+1.7
|
-2.3
|
+1.5
|
-1.7
|
| color=#0000ff>BKX |
-0.3
|
-1.2
|
+0.7
|
-0.5
|
+0.8
|
-0.5
|
| color=#0000ff>XBD |
-1.8
|
-1.2
|
-0.3
|
-1.1
|
+1.2
|
-3.2
|
| color=#0000ff>RTH |
-1.0
|
-0.7
|
+0.7
|
0
|
+0.2
|
-0.8
|
| color=#0000ff>CYC |
-1.0
|
-0.8
|
+0.4
|
-0.6
|
+0.1
|
-1.9
|
| color=#0000ff>PPH |
-0.6
|
+0.2
|
+0.5
|
-2.1
|
-1.9
|
-3.9
|
| color=#0000ff>OIH |
-1.9
|
-0.6
|
-0.8
|
-0.5
|
-1.4
|
-5.2
|
| color=#0000ff>BBH |
+0.9
|
-1.9
|
+1.2
|
-0.3
|
+0.1
|
0
|
| color=#0000ff>TLT |
+0.2
|
+0.7
|
-1.1
|
+1.0
|
+.06
|
+1.4
|
| color=#0000ff>XAU |
-2.1
|
+4.6
|
+.05
|
-0.9
|
+0.2
|
+2.3
|
Friday was a nothing day with sideways chop with
only a 6.4 point daily range, but the major indices all finished green, as did
the major sectors, which you can see on the table. The four-day MA of the volume
ratio closed Friday at 46 after three straight days under 40. You now have the
table for the last four weeks and you should be starting to get an idea of how
the short-term dynamics continue to roll and mostly lead price. Reading the
language of the market is a powerful skill to develop, so you can just turn
off all of the subjective “maybe this, maybe that” chatter of the empty suits
in the media and the parade of commentators they drag on the TV every day.
The SPX has broken out of the rising wedge to
the
downside, closing below it for the past five days. You certainly knew that
was a
possibility based on the negative divergence in momentum preceding the price
weakness. (See the Nov. 17 commentary.) The major indices all closed around
their 50-day EMAs, and the numbers, to save you the time, are as
follows:
| Close | 50-day EMA |
89-day EMA |
|
| size=”2″>SPY | 104.21 |
103.98 |
102.41 |
| size=”2″>SPX |
1035.28 |
1035.30 |
1019.75 |
| size=”2″>DIA | 96.49 |
96.68 |
95.20 |
| size=”2″>QQQ | 34.22 |
34.41 |
33.49 |
The average up volume for the week vs. the
average down volume was .67 last week, as you see on the net column of the
dynamics table, with 513 million up and 771 million down. Working back the
last
three weeks, you had .90 the previous week ending Nov. 14, then 1.3 and a
1.6
ratio for the week ending Oct. 31.
Because the major indices are all around the
psychological 50-day EMA, our trading plan is ready for any upside reflex,
as
well as continuation intraday short plays that could quickly get to the
89-day
EMA levels of the major indices, if the indices were to go to red today, but
I
see that the early morning futures are up fairly well.
On a position basis, my best interest lies on
the
long side from a more short-term oversold retracement that takes out the
1018.32
SPX swing point low of 10/24 and into the 89-day EMA zone. That’s where an
RST
long pattern sets up. I think the highest probability is another run-up
before
year’s end. Remember, there are more hedge funds than mutual funds now, with
most of them taking 20% of the action or more, so you know where their bias
is
and will do their best to accelerate any of the Generals’ buy side activity
into
year end.
Whether it be a quick drop to the 89-day EMA
for
the SPX, or else a reflex off the 50-day EMA after the past five days of
trading
right on it, you will be ready. In addition to the major indices and HOLDRs,
you
should have a ready focus list of stocks that are in primary uptrends and
have
retraced to the 20-day EMA, or in some cases, the 50. Some examples of these
are
(
QLGC |
Quote |
Chart |
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PowerRating),
(
TER |
Quote |
Chart |
News |
PowerRating),
(
IGT |
Quote |
Chart |
News |
PowerRating),
(
ROK |
Quote |
Chart |
News |
PowerRating),
(
ZMH |
Quote |
Chart |
News |
PowerRating),
(
NVLS |
Quote |
Chart |
News |
PowerRating),
(
MXIM |
Quote |
Chart |
News |
PowerRating),
(
CSCO |
Quote |
Chart |
News |
PowerRating),
(
NATI |
Quote |
Chart |
News |
PowerRating),
(
ITW |
Quote |
Chart |
News |
PowerRating),
(
TXT |
Quote |
Chart |
News |
PowerRating),
(
UNP |
Quote |
Chart |
News |
PowerRating) and
(
A |
Quote |
Chart |
News |
PowerRating).
Some 50-day EMA retracements that are now in
mostly flag patterns are
(
PX |
Quote |
Chart |
News |
PowerRating),
(
UTX |
Quote |
Chart |
News |
PowerRating),
(
HON |
Quote |
Chart |
News |
PowerRating),
(
AVP |
Quote |
Chart |
News |
PowerRating) and
(
LEH |
Quote |
Chart |
News |
PowerRating).
Also, the XBD (the brokers index) has led the major indices on this reflex
down
and has retraced to the 89-day EMA and has been more oversold, so look at
(
MER |
Quote |
Chart |
News |
PowerRating) which is set up right at the 89-day EMA.
Some of these stocks lend themselves to both
a
daytrade and/or short-term position trades. You decide based on your style
of
trading, but they are good additions to your current focus list. This week
is
essentially a two-and-a-half-day week because of Thanksgiving on Thursday
and in
essence starts Wednesday at noon, as many get a head start on the holiday.
Friday is half staffed for most firms, so liquidity is usually nonexistent.
Have a good trading day,
Kevin Haggerty