Squeeze Bias Is Long Today And Friday

It was another energy day with crude oil trading

to 51, +1.3 points (+2.6%). The spike came on the 10:30 a.m. ET bar on a report

about a decline in crude oil inventories that gave hedge funds the chance to run

them and probably some shorts scrambling to cover. There were some
Trap Door

Opening Reversals on the 10:30 a.m. bar. Daytraders that play in the energy

stocks caught some windfall profits yesterday.

In the real world, the market action was soft and

to 2050. NYSE volume was on the lower side at 1.3 billion shares with the volume

ratio negative at 34, as was breadth -1156 with the 4 MA turning slightly

negative to -158. The 4 MA of the volume ratio is down to 48 due to the last

five days of the
(
SPY |
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PowerRating) churning at the sequence zone from 119.33 – 120.11,

which includes the 119.54 .618 retracement to the 123.25 bull cycle high from

the 113.55 04/20/05 low. For example, the SPY highs for the past five days were

119.41, 119.39, 120.04, 119.83 and 119.87 yesterday. The SPY volume for the five

days is about -35% below average.

With the exception of the
(
OIH |
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PowerRating), +2.0%, and

XLE, +1.5%, all of the primary sectors finished red, in line with the major

unable to re-cross their 200-day EMAs in line with the major indices.
(
BSC |
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PowerRating),

always a rumored deal name, is trading above its longer-term moving average, as

is
(
LEH |
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PowerRating), which is very strong on the bond side.

The
(
TLT |
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PowerRating) — bond proxy — short trade was

initiated below 94.18 yesterday and kept because it closed in the money at

93.77. Sooner or later the CPI fraud will unravel, when in fact, almost

everything you use in your daily life is increasing in double digits, i.e.,

housing, health insurance, food, heating oil, etc. These are growing much faster

than individuals’ income, and a high-inflation/low-growth environment is

certainly not a good market scenario if it remains this way down the road.

Whatever else happens into month-end will be

today and Friday. The regulators frown on overt marking up of positions on the

last day of the month, so that day can often be a neutral to down day. The XLE

has made higher lows and highs for seven straight days since the
Generals’

Pullback entry after the 37.94 low and is +8.9% with the OIH +9.4%. Traders who

have both a short-term long position and also daytrade the energy stocks should

keep the stop on the XLE long trade no lower than 40.30 and should take 50% of

the current position profits right here (XLE closed at 41.10).

Have a good trading day,

Kevin Haggerty

P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.