The Generals Are Feeding
The
Generals gave us a power move yesterday,
resolving the trading range and certainly skewing the bookie stats as the the Nasdaq 100
(
NDX |
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Chart |
News |
PowerRating) broke out the top, advancing 6.5% to 2053. The Dow and S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating)
had previously come out of the top of their ranges. There were some great
multipoint moves as you got trade-through entry in all of the Semis from
yesterday’s sheet, in addition to great moves in
(
VRTS |
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Chart |
News |
PowerRating),
(
IDPH |
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News |
PowerRating) and
(
ITWO |
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News |
PowerRating),
also with trade-through entry.
(
VRSN |
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News |
PowerRating),
(
HGSI |
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News |
PowerRating) and
(
PDLI |
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Chart |
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PowerRating) had big pops, but had gap openings.
As the Generals got greedy
in the techs, the NDX outpaced the SPX by over 4 to 1, 6.5% to 1.6%. The NDX is
looking at the .50 retracement to the 2772 swingpoint high of 2060 and the 2087
resistance, where the last waterfall decline started. Yesterday was an excellent
opportunity to sell some percentage of your longs into strength.
So far, the move off the
bottom of 1349 has been +45% to 1953; -11% to 1743; +13.7% to 1982; -10.7% to
1769; and +16% to 2053. That’s travel ranges in only 30 days, folks, 96% of
action in the NDX and much more in individual stocks.
The SPX gave us an Opening
Reversal to new intraday highs above 1293 on the 10:05 a.m. bar, ran to 1306.86
and retraced to 1300.93, just above the .38 retracement level. From the 2:00
p.m. bar, it was straight up into the close of 1312.83. If you took the contra
trade at the 1305-1307 resistance and shorted SPYs but got stopped out, you
still made a good trade with excellent risk/reward.
For example, the SPX cash
made a 1,2,3 lower top but the SPY diverged, giving you a 1,2,3 higher top entry
just below 131.10 with a stop at 131.20 (I will show you both charts in
tomorrow’s text). The reward to risk was excellent at a key resistance level. A
retracement to the .38 level of 130.32 was a profit potential of 75 cents,
assuming entry of 131.07 and 1/4 point stop loss at 131.32, which is just above
the 131.18 high, giving you some wiggle room.
The risk/reward was 3 to 1
on just the retracement to the .38 level, and obviously at the .50 / .618, it
gets much better. This was a
losing trade for some of you if you let it run back up from a 53 cent profit to a
.25 point loss, but for those of you who scratched the trade on the way back to
cost, you did just fine. It’s always good to show the losing trades with the
winning trades.
Stocks
Today
|
(June
|
||
|
Fair Value
|
Buy
|
Sell
|
|
2.70
|
3.95 |
1.40
|
Extended is as extended do
— no questions the indexes are overbought, but the Generals are feeding so you
have to be ready for continuation entries if they return for the stocks that
exploded yesterday on significant volume. It was very positive to see them take
(
CSCO |
Quote |
Chart |
News |
PowerRating) and
(
SUNW |
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Chart |
News |
PowerRating) out of their consolidations. SUNW’s
breakout was on twice its 30-day average volume, so we start with that on the
radar screen.
Starting with the Fallen
Angels,
(
SUNW |
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Chart |
News |
PowerRating),
(
CSCO |
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Chart |
News |
PowerRating),
(
EMC |
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Chart |
News |
PowerRating) and
(
ORCL |
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Chart |
News |
PowerRating).
Other stocks:
(
FDC |
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Chart |
News |
PowerRating),
(
LTD |
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Chart |
News |
PowerRating)
(which is still in its range and volume building),
(
DOW |
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Chart |
News |
PowerRating),
(
DD |
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Chart |
News |
PowerRating),
(
FITB |
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News |
PowerRating),
(
NTRS |
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News |
PowerRating),
(
C |
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Chart |
News |
PowerRating),
(
COF |
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Chart |
News |
PowerRating),
(
PVN |
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Chart |
News |
PowerRating),
(
LEH |
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Chart |
News |
PowerRating),
(
MWD |
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Chart |
News |
PowerRating),
(
GS |
Quote |
Chart |
News |
PowerRating).
In the Semis (stay all over
them even though they are extended) look for pullbacks in
(
KLAC |
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Chart |
News |
PowerRating),
(
NVLS |
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Chart |
News |
PowerRating),
(
IDTI |
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Chart |
News |
PowerRating),
(
BRCM |
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Chart |
News |
PowerRating),
(
LRCX |
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Chart |
News |
PowerRating),
(
NVDA |
Quote |
Chart |
News |
PowerRating) and
(
ELNT |
Quote |
Chart |
News |
PowerRating).
The Biotechs:
(
IDPH |
Quote |
Chart |
News |
PowerRating),
(
HGSI |
Quote |
Chart |
News |
PowerRating),
(
PDLI |
Quote |
Chart |
News |
PowerRating) (extended but stay for pullbacks),
(
AMGN |
Quote |
Chart |
News |
PowerRating) and
(
BGEN |
Quote |
Chart |
News |
PowerRating) (the Generals love ’em —
they’ll come for them).
Also the lagging Travel
Range stocks
(
NTAP |
Quote |
Chart |
News |
PowerRating),
(
JDSU |
Quote |
Chart |
News |
PowerRating),
(
JNPR |
Quote |
Chart |
News |
PowerRating),
(
CIEN |
Quote |
Chart |
News |
PowerRating),
(
GLW |
Quote |
Chart |
News |
PowerRating) — they are still in ranges.
Also, stay on top on
(
VRSN |
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Chart |
News |
PowerRating),
(
VRTS |
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Chart |
News |
PowerRating) and
(
MERQ |
Quote |
Chart |
News |
PowerRating).
Have a good trading day.
Don’t take too many first entries — look for second entries on continuations
and be all over your five-minute charts, scrolling.
Chart 1. Five-minute chart of
yesterday’s S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) with 8-,
20-, 60-
and 260-period EMAs.
Chart 2. Five-minute
chart of yesterday’s New York Stock Exchange ticks.