Strategy Remains The Same
The
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) gave us an excellent Trap Door entry after
the early red as it ran from an intraday low of 913.71 to an intraday high of
934.31. For two days in succession, Trap Doors rang the register for us. The SPX
went sideways from 11:00 a.m. to after 2:00 p.m. when they hit the futures and
then sent them back down to intraday lows, before closing at 921.40. Hope you
caught both moves.
The
(
SMH |
Quote |
Chart |
News |
PowerRating)s had a
positive divergence on the day at 29.71. A break below Friday’s closing range
and the 20 EMA on the 60-minute chart of 29.21 could see a quick drop to the
28.40 – 28.50 level. The SMHs are trading well above the 2.0 longer-term band of
27.40, as is the Nasdaq, which closed at 1373, which is +6.0% above its 2.0 band
as it fights to hold the .786 retracement to the 1990 low. The Dow is right on
its 2.0 band, with the 3.0 band zone from 8425 – 8350.
The SPX is most oversold
relative to its bands, as it closed at 921.39, just above its 915 – 890 3.0 band
zone. Needless to say, the two best rallies the SPX has had over the last 1 1/2
years both occurred after breaches of the 3.0 volatility bands, one in the
fourth quarter of 2000 and then September of last year. The volatility around
these zones is always outstanding and provides opportunities both ways. This, of
course, will be magnified if the political circus in Washington between the two
political parties doesn’t cease and get back to reality. It’s just simply
sickening.
The scorecard for Friday
had the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) -1.3%, the SPX -0.6%, the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -0.1%
and the NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) +0.3%. NYSE volume dropped off to 1.6 billion, a
volume ratio of 44, and breadth -44. The
SOX
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) gained 1.3%, and has recovered 8.1% of the prior three days’
-12.5% loss. The semis are a thrill a minute and the daytrader’s best friend,
and I expect that to continue. Volume + range = opportunity. The next big media
circus will be Intel’s
(
INTC |
Quote |
Chart |
News |
PowerRating) coming report.
The Program Gang
continues to give us numerous two-way trades in the major indices, so our
intraday strategy remains the same, in addition to select stocks like semis and
biotechs that have average daily ranges of 2 points or more. The SPX doesn’t get
going until it can trade above its 20-period EMA on the 60-minute chart of
929.67, then above the 935 resistance.
Have a good trading day.
Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Friday’s NYSE TICKS