Retracement Zone: Here’s What This Corner Is Doing

day at +0.5% to 1191.08 on the lowest NYSE volume (1.36 billion shares) since

the 05/09/05 swing point high of 1178.87 preceding the four-day decline to

1146.18 where this current move started. The volume ratio was 69 and breadth the

lowest of the four days at +817. The 4 MA of the volume ratio is short-term

overbought at 74, as is the 4 MA of breadth at +1195. The
(
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119.40 intraday high yesterday into the sequence zone outlined in the previous

was that all of the green primary sectors underperformed the SPX, which were the

XBD and RTH, each +0.4%, and the
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SMH |
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PowerRating) +0.03% . The BKX, -0.1%, and XLB,

-0.5%, were the red sectors. The exception yesterday was energy again, with the

(
OIH |
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PowerRating) +2.1% and XLE +1.9%, which once again gave daytraders an excellent

day. One example is the Kings & Queens reversal for the XLE at the 240

EMA with entry above 39.29. Exits were made on the double top reversal (see

chart). There were, of course, other similar individual energy stock reversals

with similar patterns. The good percentage move in the energy stocks, while good

for daytraders, was on below-average volume. The XLE intraday 40 highs the past

.50 retracement to the 12/15/04 40.68 high with the .618 retracement at 38.26.

The Nasdaq
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$COMPQ |
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controlled “Game” and a good time for daytraders to take only the most defined

setups. On the major indices, being that price is entering a retracement zone,

Trap Door shorts will be taken on early strength and new continuation index