The Edge
The
tale of the tape doesn’t tell the story of
yesterday’s action in the casino, with the Program Gang and Accelerators being
"The House." At day’s end, the Dow
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$INDU |
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or 11 points, the SPX
(
$SPX.X |
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(
$NDX.X |
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volume ratio of 32, and breadth -194. The Nasdaq once again had a positive
divergence with a volume ratio of 53, closing at 1632, or +0.5%.
The real game yesterday
was the travel range in the major indices and
(
SMH |
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windfall for sequence traders, as it always does. We also had a nice kicker from
our defense stocks and health care, like
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THC |
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(
UNH |
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the Dow after the first low on the 9:35 a.m. bar went +89 points, -141, +135 to
finish off just 11 points. Ho-hum if you just read the results in the paper, but
a dynamite day for traders.
The other indices had
similar moves. The sequence trade for the SPX was a 1,2,3 short below 1067,
which put it below all of its EMAs, the 8, 20, 60 and 260. They are all on the
five-minute chart. Seminar veterans recognize this. The intraday low was 1054.26
vs. the 1.28 volatility band of 1054.74 and was also a Fib extension of the
first leg up. You do the numbers. The low was a hammer bar, which gave you entry
above 1055.73 as the SPX then ran to 1067.40. Net net, you caught two major
moves, and I am not including any Trap Door trade you might have taken after the
early down on the first two bars.
The SMHs gave you the
same 1,2,3 sell, which traded down to a 37.45 low vs. its 1.5 volatility band of
37.42. Then the same hammer signal bar with entry above 37.65 which ran to
38.95. You caught over two points from entry if you played SMHs both ways.
The DJX was identical to
the SPX with a 1,2,3 sell to an intraday low of 98.02 with the 1.28 volatility
band at 98, which is also the 1.618 extension of the first leg up. If you want
the edge, be a sequence trader because the game is played in a casino, and we
are not the house. Sequence covers you in all time frames regardless of whether
the major indices are trading up, down or sideways. As long as there are
programs and derivatives, there will be sequence.
End-of-month positioning
yesterday did leave a few of the major techs green, along with some semis, like
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MCHP |
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MU |
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TXN |
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QLGC |
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(
XLNX |
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Stocks
Today
If they play the semi
game, look at
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MCHP |
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(
KLAC |
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(
NVLS |
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EMAs and possible RST buy entries today.
Also,
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STJ |
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USAI |
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PECS |
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SYMC |
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In the defense sector, if
they want to come for them, we’ve just got to sit there and wait for them to
come and take them on continuation trades. Look at
(
GD |
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(
ATK |
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(
LMT |
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(
NOC |
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(
RTN |
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And two biotechs if they
stay green today,
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GILD |
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(
IDPH |
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Have a good trading day.
Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Thursday’s NYSE TICKS