The Game is ON
What Wednesday’s Action Tells
You
NYSE volume at 1.65 billion yesterday was the
most since 02/11 when the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was +1.1%. It was -1.5%
yesterday,
closing at 1123.91. The rest of the major indices were off about the same,
as
you can see in the table. The volume ratio was 12, with 1.44 billion shares
down
just below the previous day’s 1.48 billion total volume, as was the case on
Tuesday vs. Monday’s total volume. Yesterday’s breadth was -1627. The 4 MA
of
the volume ratio is 29 and very short-term oversold, and a weak volume ratio
today will put the 4 MA at an extreme short-term oversold.
The SPX was a non-event yesterday from 9:30 a.m.
to 1:05 p.m. ET, trading between 1141.45 and the 1136.50 zone. From there it
dropped down to the 1.0 volatility
band zone, trading between 1133.55 and 1131.15. From 1:45 p.m. to 3:00 p.m.,
the price action churned at the 1135 – 1136 level, and then the 1.0 volatility
band level from yesterday’s commentary. The only move up was above the 10:15
a.m. bar high of 1137.69, following its 1136.64 low. This only ran a few points
to 1141.33, then it went trend down. It was a knife down from 3:00 p.m.
to 3:30 p.m. as the programs initiated a decline from 1131.50 to an 1122.62
low at 3:30 p.m. and then the selling stopped like magic, with the SPX closing
right at the 2.0 volatility band level.
Most all of the primary sectors were down 2.0%
or more, with five-day declines now for the
(
SMH |
Quote |
Chart |
News |
PowerRating), -6.5%, the CYC, -5.3%,
and XBD, -5.1%. With the terrorist bombing in Madrid, the illiquid global futures
accelerated red this morning, with the Dow futures off about 75 – 80, and then
by 7:45 a.m., that was cut in half to -37, which was the same with the SPX and
Nasdaq. This corner is hoping that big red will hold which would enable the
market makers and specialists to take price down to a significant discount for
volatility band trades in the opening 30 minutes. Maybe we will get lucky and
they will turn big red again.
| size=2> | Thursday
3/4 |
Friday
3/5 |
Monday
3/8 |
Tuesday
3/9 |
Wednesday
3/10 |
| color=#0000ff>Index | |||||
| color=#0000ff>SPX | |||||
| color=#0000ff>High | 1154.97 | 1163.23 | 1156.86 | 1147.32 | 1141.45 |
| color=#0000ff>Low | 1149.81 | 1148.71 | 1146.97 | 1136.84 | 1122.62 |
| color=#0000ff>Close | 1154.88 | 1156.86 | 1147.20 | 1140.57 | 1123.91 |
| color=#0000ff>% | +0.3 | +0.2 | -0.8 | -0.6 | -1.5 |
| color=#0000ff>Range | 5.2 | 14.5 | 9.9 | 10.5 | 18.6 |
| color=#0000ff>% Range | 97 | 56 | 2 | 35 | 7 |
| color=#0000ff>INDU | 10588 | 10596 | 10529 | 10457 | 10297 |
| color=#0000ff>% | -.05 | +.07 | -0.6 | -0.7 | -1.5 |
| color=#0000ff>Nasdaq | 2055 | 2048 | 2009 | 1995 | 1964 |
| color=#0000ff>% | +1.1 | -0.4 | -1.9 | -0.7 | -1.6 |
| color=#0000ff>QQQ | 36.81 | 36.65 | 35.76 | 35.65 | 35.17 |
| color=#0000ff>% | +1.1 | -0.3 | -2.4 | -0.3 | -1.4 |
| color=#0000ff>NYSE | |||||
| color=#0000ff>T. VOL | 1.26 | 1.37 | 1.25 | 1.48 | 1.65 |
| color=#0000ff>U. VOL | 783 | 819 | 372 | 261 | 197 |
| color=#0000ff>D. VOL | 438 | 538 | 866 | 1.20 | 1.44 |
| color=#0000ff>VR | 64 | 60 | 28 | 18 | 12 |
| color=#0000ff>4 MA | 58 | 52 | 50 | 42 | 29 |
| color=#0000ff>5 RSI | 66 | 69 | 43 | 32 | 17 |
| color=#0000ff>ADV | 2035 | 2236 | 1394 | 1237 | 845 |
| color=#0000ff>DEC | 1237 | 1075 | 1906 | 2070 | 2472 |
| color=#0000ff>A-D | +798 | +1161 | -512 | -833 | -1627 |
| color=#0000ff>4 MA | +510 | +371 | +347 | +154 | -453 |
| color=#0000ff>SECTORS | |||||
| color=#0000ff>SMH | +1.8 | -0.9 | -4.1 | +0.6 | -2.0 |
| color=#0000ff>BKX | -.03 | +1.0 | -0.4 | -0.6 | -1.4 |
| color=#0000ff>XBD | +1.1 | +0.6 | -1.6 | -1.6 | -2.2 |
| color=#0000ff>RTH | +0.3 | -.03 | -0.6 | -0.8 | -2.1 |
| color=#0000ff>CYC | -.08 | +0.1 | -1.3 | -1.2 | -2.7 |
| color=#0000ff>PPH | +0.4 | +0.2 | -0.2 | -1.3 | -2.2 |
| color=#0000ff>OIH | -0.3 | -0.6 | +0.2 | -1.7 | -3.3 |
| color=#0000ff>BBH | +0.7 | +1.6 | -1.5 | -1.1 | -1.8 |
| color=#0000ff>TLT | +0.4 | +1.9 | +0.6 | +0.6 | -.06 |
| color=#0000ff>XAU | +1.4 | +2.9 | -1.1 | +0.1 | -3.2 |
^next^
The SPX decline yesterday puts it just -2.9% on
a close-to-close basis from its 1157.76 high close on 02/11, which just happens
to be the spike volume day of 1.63 billion shares at +1.1%. A further decline
to a -5.0% or -6.0% close-to-close is at the 1100 and 1088 levels, with 89-day
EMA at 1108 and the 200-day EMA at 1058. Declining price to rising 200-day EMAs
is what you want in a longer-term uptrend. Funny how emotion changes. -2.9%
so far on a closing basis for the SPX, which is +51% off the 769 low and +47%
low-to-high off the 789 retracement low without even a -5.0% decline since that
03/12/2003 789 low, and all of a sudden it’s mini-panic time.
The
(
QQQ |
Quote |
Chart |
News |
PowerRating)s are +97.4% low-to-high since October
2002 and +67% from the 23.32 March retracement low. There hasn’t been a 10%
decline since that March low and as of yesterday, the QQQs are -8.8% close-to-close
and -10% high-to-low from that 39 high. That is how markets work, folks. The
QQQs closed at 35.19, still in a price zone with a confluence of three to four
numbers with the primary zone just below, which is the .236 retracement to the
19.76 2002 low of 34.42 and 200-day EMA at 34.15, so this corner is certainly
hoping for that discount opening and will participate at various volatility
band levels for today in case the specialists do gap them down. The QQQ volatility
band levels for today are 1.0 — 34.74, 1.28 — 34.62, 1.5 — 34.52 and 2.0
— 34.30. This corner will be involved.
The SMH has three numbers in the zone from
38.44
to the 200-day EMA of 38, and like the QQQs, SPX and Dow, they are all at
the
three-month 2.0 standard deviation bands, with even the SPX five-day RSI
below
20 at 17 yesterday.
The long synthetic straddle put on the
1150 -1160
zone in the SPX is doing very well to say the least, and the
out-of-the-money
March calls were covered yesterday for three months of positive premium
taken in
vs. the long call, so every move in the market makes someone happy. The SPX
AIV
went out at 16.38 yesterday with the call at 15.46 and put at 17.58. That is
vs.
the 12.34 AIV last week. (Love it.)
We are in Wave 4 of the bull run from the 2002
lows, and we hope for a fifth wave that might take the SPX to the .618 retracement
zone at 1254. That won’t happen if the perception continues to grow that Kerry
will win in November, and of course, the media is desperately trying to get
that done. If there is no fifth wave, then looking at the weekly chart, I see
that it could be at least an attempt at 1,2,3
top and that means another up move.
Have a good trading day,
Kevin Haggerty
P.S. You can finally learn
what traders have been asking me to teach them for years—