Semis In Focus Today — Here’s A Possible Play
What Wednesday’s Action Tells
You
It was a choppy unproductive day yesterday
trading the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) as it closed at 1116.27, -0.5%, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was -0.2% to 10,313, while both the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating),
1851,
and
(
QQQ |
Quote |
Chart |
News |
PowerRating) were -0.4%. NYSE volume was 1.25 billion shares with a volume
ratio of 34 and breadth -597. There was nothing of note in the primary
sectors,
except the
(
SMH |
Quote |
Chart |
News |
PowerRating) did finish green at +0.2% and had a good early run from
27.86 to a 28.48 intraday high on the 10:30 a.m. ET bar before trading down
to
27.88 and closing at 28.04. Most of the SMH volume, both up and down, was
between 9:30 a.m. – 11:00 a.m.
For Active
Traders
I have included the
(
SPY |
Quote |
Chart |
News |
PowerRating) five-minute
chart
that highlights the choppy action. There was an initial
Flip Top with the
breakout above 112.81, carrying to just 113.04. This was a retest, as the
SPX
hit 1123.05 vs. the resistance at 1124 – 1125 noted in yesterday’s
commentary.
If you faded that zone again, you caught a quick trade. After some chop, the
search-and-destroy mission continued as price reversed the Flip Top low of
112.54. Both breakouts caught the early longs and shorts, as the SPY then
rallied to 112.82 again before fading into the close.
It was easier trading the QQQ with the RST
short
after the 34.68 10:35 a.m. high. I labeled the larger RST symmetry to the
left
of 34.68. This RST setup was right on the 233-day EMA of 34.69, with the
200-day
EMA just above at 34.86. Regardless of which index proxy you traded, the
intraday highs were right at price zone resistance, so it was good
risk/reward
taking the trade.
Today’s
Action
The early futures are small red at 8:15 a.m.,
with the S&Ps -2, Dow -32 and Nasdaq -2. The SPX closed at 1116.27, and
you have
initial resistance at 1124 – 1125, and on the downside, it’s the 1106 – 1110
minor support zone. I have included the QQQ daily chart, and for the last 12
days, it has traded between 33.65 – 34.86, which is right into the
multiple-line
resistance. The QQQ closed at 34.30 with the 20-day EMA at 34.15, and for
the
last five days, it has made lows from 34.05 – 34.18. Right now there is a
negative 5 RSI divergence during this 12-day range, so 34.05 – 34.18 is a
live
zone both ways.
The SMH (semiconductors) remains a primary
.618
zone focus, and it had a good early volume move yesterday that failed at
10:30
a.m. The SMH finished in a closing range between 28.07 – 27.88, so that’s
today’s starting point. This corner will not sell a downside breakout of
that
closing range. If 27.78 should get taken out early, then look for an upside
reversal. If the semis go green early, then a trade-through reversal of
28.30,
accompanied by volume, might be the play.
Have a good trading day,
Kevin Haggerty
