Tech Indices At Inflection Zone For Generals To Squeeze Hedge Fund Shorts

key time zone high of 1178.87 (05/09/05) and declined to an 1146.18 low on

Friday (05/13/05) before closing at 1154.05. The 4 MA of the volume ratio at

that high was 65 and the 4 MA of breadth +750. Last Friday the 4 MA of the

volume ratio ended at 31 and the 4 MA of breadth -825, so the four-day reversal

became short-term oversold. Yesterday the SPX bounce was +1.0% to 1165.69 on a

re-cross of both the 233- and 200-day EMAs. The Dow
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10,250, the Nasdaq
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billion shares with a volume ratio of 71 and breadth positive at +1350. The

primary sectors were led by the RTH (+2.2%), BKX (+1.1%), XBD (+1.5%) and CYC

(+1.3%). The major index proxies all traded less than their average volume on

the reflex, with the
(
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than double its average volume (144%) and the XLE, -0.4%, was 40% above its

average volume. The rest of the SPDRs all finished below average volume, led by

the XLI, +1.4%, on only 43% of average, as did the XLY, +1.2%. Net net, rising

moving averages and upper channel lines, so if the Generals and hedge funds push

the seasonal technology bias, they are at an inflection point that would force

the hedge funds that are heavily short tech to scramble. Daytraders can simply

say, “Show me,” and maybe take some intraday shorts into the resistance, which

is 36.45 -36.70 for the QQQQ and then be in position to reverse and go the other

way. The Nasdaq, which closed at 1994.43, has a primary resistance zone from

the
Generals’ pullback in the XLE from the long side on any weakness to 37.90

(support) – 37.70 (200-day EMA) zone. The XLE made a
1,2,3 Double Bottom at

37.94, and daytraders caught a +2.0% move from their entry to the intraday 38.70 high,

closing at 38.63. There was also a volatility band confluence at 37.92, which

was also a 2.618 Fib extension of Friday’s last leg up from 38.60 – 39.02. There

was even more Sequence as the XLE was extended to the -2.0 standard deviation

bands on both the 20-day and three-month charts. Simply put, this setup was all

of what you learned in the seminar material. Regardless of what the hedge funds

are doing on the sell side of energy stocks vs. any
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the XLE volume expanded to 24 million, which is 40% above its average volume and

closed in the top of its range, so obviously there was long side activity by the

buy side accounts, and that is what we anticipated and capitalized on once

futures/SPY was on a re-cross of the SPY 116 200-day EMA, which traded to a

today, so daytraders must focus on any early overreactions to these reports for

your initial trading activity, in addition to any price action around the