Small Net Change, But Big Travel Range And Opportunity
What Monday’s Action Tells
You
The net net at day’s end for the
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SPY |
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closed at 982.82, +0.3%, as did the Dow
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were +0.2%, and the Nasdaq
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1.28 billion, which is light, the volume ratio 47, which tells us little, and
breadth -800, which says the afternoon rally was the big-cap index stocks.
However, the indices final net price difference
did not indicate the travel range yesterday, as evidenced by a break below the
50-day EMA by the SPX when the SPY traded below its 50-day EMA of 98.07 down to
an intraday low of 97 by 10:30 a.m. ET, then reversing to re-cross the 50-day
EMA, closing at 98.51, unchanged on the day. The E-mini traded below its 50-day
EMA of 976.09 to a 964.75 low, then re-crossed, closing at 980.25. That kind of
intraday travel range spells opportunity for the daytrader and frustration for
the institutional trader.
In the major sectors, the
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SMH |
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RTH and PPH turned green during the rally and closed that way. The
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OIH |
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-2.3%,
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BBH |
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For Active Traders
Traders had a good day, and some caught both
moves. The first was the breaking of the 50-day EMA pivot to the downside by the
SPY and E-mini, and then the second was the rally off the 10:30 a.m. lows. I
have included a chart today of the SMH setups for yesterday’s upside reversal.
At 10:30 a.m., the SMHs were -2.1% and ended the day +0.3%. The SMH had the best
daily chart going into yesterday, so that’s why the setup was taken, as opposed
to the other major indices.Â
Following along on the SMH five-minute chart, you
see that the 32.02 intraday low bar reversed the previous day’s 32.10 low,
setting up an RST buy pattern. The symmetry of the pattern is highlighted with
lines above and below the swing points. Those of you that have learned the
pattern see that there is a smaller RST pattern within the one that I outlined,
but it doesn’t have much symmetry, and the larger RST does, so that’s why it was
taken. The 20-day EMA on the daily chart was just below at 31.75. Entry was
above 32.13, which also reversed Friday’s 32.10 intraday low, which was another
reason to take the trade. 32.13 was also the 1.0 volatility band yesterday.
If you didn’t take the RST reversal, there was a
second chance for entry on the 1,2,3 higher bottom with entry above 32.22. The
SMH ran to a 33 high, closing at 32.86. The SPY gave you a 1,2,3 higher bottom
entry above 97.45 and the E-mini above 969.25, which are the highs of the 12:05
p.m. bar.Â
Today’s Action
For today, we start out with hammer bar closes in
the top 25% of the range for both the SPX and Dow. Their 50-day EMAs are 977.05
for the SPX and 9035 for the Dow which reversed yesterday just 8 points above
its 50-day EMA, so they become immediate pivots today. The SMHs are still coiled
against the top of the ascending triangle with another higher rally close
yesterday at 32.85. The QQQs are sitting right at its 20-day EMA of 31.42,
closing at 31.45. There is always opportunity when price is sitting on or near
inflection points as the major indices are now. Also, keep those semis from
yesterday’s list on your screen today, along with
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NVLS |
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AMAT |
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PowerRating). “Ride the horse until it wants to go back to the barn.”
Have a good trading day,
Kevin Haggerty
