SPX At Retracement Zone — Here’s What That Means To You
What Tuesday’s Action Tells
You
The major indices opened up and then made
their
intraday highs into the 10:00 a.m. ET time period. There was a contra move,
and
then price resumed the direction of the open, failing to take out the 10:00
a.m.
high, and price went sideways into the close. On the early upside move,
volume
never really got better than 3:1, while breadth remained below +1,000.
Certainly
not the same day as Monday. The SPX
(
$SPX.X |
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PowerRating) ended at 1081.71, +0.2%,
as
did the Dow
(
$INDU |
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PowerRating) at 9973 on the third straight up day for the SPX
and
Dow. The Nasdaq
(
$COMPQ |
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PowerRating) was +0.7% to 1795 and the
(
QQQ |
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33.26.
NYSE volume was 1.27 billion, but lower
volume in
August is the norm, not the exception, regardless of up or down. The volume
ratio was 63 and breadth +636.
The brokers (XBD) and retail (RTH) led the
green
side at +1.3%, along with the semis, as the
(
SMH |
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Chart |
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PowerRating) finished +1.3%. Energy
declined, with the
(
OIH |
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Chart |
News |
PowerRating) -2.5% and is now getting back to its rising
200-
and 233-day EMA zone, so it becomes the focus once again.
For Active
Traders
For S&P traders of either the
(
SPY |
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PowerRating)
or the
futures, there was an initial Trap Door short, as the SPY traded to a 109.28
high on the 9:55 a.m. bar vs. its 233-day EMA of 109.11 and 20-day EMA at
109.26. Price reversed for the contra move on the 10:00 a.m. bar and
declined to
108.61 and its 60 EMA, which was exactly the 50% gap pullback as you see on
today’s SPY five-minute chart. Price resumed the direction of the open up to
108.95, then went sideways into the close of 108.91. Once again, the
“90% – 60%
rule” was in play. If you don’t know the five strategies that encompass
this
rule, then
get the material
because your trading will improve
immensely.
Today’s
Action
The SPX hit its retracement short zone
yesterday
as the 12-month EMA going in was 1085.25 and the 233-day EMA 1086.62. In
fact,
the SPX reversed at 1086.96 yesterday. The 200-day EMA is 1093 with the
12-month
SMA at 1097.41. This is just a 1.1% range of resistance low-to-high, so if
you
were waiting for a position short entry, you either got started or else
decided
to continue talking about what if, etc. Lots of commentary and no
action.
For short entries, this is the range to start
a
position and finish if price scales up to 1093 – 1097. If you are wrong, the
percentage stop above this range is minimal. The closing range focus lows
today
for the SPX are 1080 and then 1078.78, which is the 07/26 low before the
re-cross of both the 200- and 233-day EMAs to 1108.60. The downward channel
line
from the 06/24 1146.34 high is right at the 200-day EMA of 1093. Enough
said, as
it is entry at the lowest common denominator with a miniscule percentage
stop
above. It’s not a debate, folks, it’s trading.
If you trade the
(
DIA |
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PowerRating)s or Dow futures,
it’s
the same scenario. The 233-day EMA is 100.41 and the 200-day EMA 100.93. The
DIAs closed at 100.25 after hitting an intraday high of 100.59 before
declining
to 99.93 and the same gap pullback move as the SPY.
Don’t forget to focus on the OIH and related
stocks as it trades down or just below its 200-day EMA of 67.61 and 233-day
EMA
at 66.95. The OIH closed at 68.12.
Have a good trading day,
Kevin Haggerty
