The House Has The Edge Until After The Election
What Friday’s Action Tells
You
The low of the week for the SPX
(
$SPX.X |
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Chart |
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PowerRating)
at 1090.19 was on Monday, 10/25, and the weekly high was 1131.44 on Friday
as
the SPX closed the week at 1130.19. This put the SPX at +3.1% for the week
and a
job well done on the month- and fiscal-year-end mark-up by some of the
larger
funds. Friday was, as expected, a holding action, and the SPX was +0.2%. The
three-day mark-up for the quarter ending 09/30 was from 1101.29 to just
1114.58,
but funny thing, it closed above last year’s 1111.92 12/31 close, just as
Friday
did.
The Dow
(
$INDU |
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PowerRating) was also +0.2% to
10,027 on
Friday and +2.8% for the week. The Nasdaq
(
$COMPQ |
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Chart |
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PowerRating), 1975, was -1
point on
Friday, while the
(
QQQ |
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intraday high which was right at the resistance you had anticipated if you
have
read this ragsheet on a regular basis. On the week, the Nasdaq was +2.6% and
the
QQQ +3.0%.
NYSE volume was +1.5 billion with the volume
ratio 60 and breadth just +559, highlighting the concentration in fewer
big-cap
stocks, as opposed to a broad market rally. The 4 MA of the volume ratio is
now
67 with the 4 MA of breadth at +833. In addition to the 5-day RSI at 75, we
have
entered the short-term overbought zone, and as I said on Friday, it means
little
in front of the election, unless the results turn the major indices red. I
would
guess that the election/terror noise might make the Generals reluctant to
get
aggressive today and Tuesday on any new money or reallocation.
The sectors didn’t tell us much on Friday,
except
for the bounce on the re-cross of the 50-day EMA by the
(
OIH |
Quote |
Chart |
News |
PowerRating), +2.0%,
and
related issues.
There were, however, some excellent weekly
sector
advances that outperformed the +3.1% weekly gain by the SPX. With the
month-end
mark-up, the biggest gainers were the XBD, +4.6%, the
(
SMH |
Quote |
Chart |
News |
PowerRating), +4.5%, and
CYC
+4.0%. The other primary sectors that also did better than the SPX were the
PPH,
+3.6%, BKX, +3.5%, and RTH +3.2%.
The up volume/down volume ratio was positive
last
week at 1.8:1. The average up volume was at 1.0 billion and the down volume
just
562 million. This was better than the September quarter-ending mark-up.
There
was a negative divergence in the rising price and rising down volume with
declining up volume on Wednesday and Thursday.
For Active
Traders
If you trade the SPX with either the
(
SPY |
Quote |
Chart |
News |
PowerRating) or
futures, the best opportunity was the
Trap Door/1,2,3 Higher Top/RST sell,
all
on the reversal of the 10:00 a.m. ET SPY bar with the 113.64 high. 113.54 is
the
.786 retracement to 114.68 from the 109.36 low where the rally started last
Monday. The other resistance level is the 113.74 swing point high of 09/13.
It
was a three-in-one-pattern setup in a frequent reversal time zone, so what
more
can I say than that.
If you traded the QQQ, you had a similar
situation with entry below 37.12 which carried down to 36.67 by 11:00 a.m.,
and
this set up an RST buy pattern with entry above 36.75 which was followed by
a
1,2,3 Higher Bottom entry above 36.80. The trade only carried to 36.95 by
1:30
p.m., then was choppy into a 36.90 close.
Today’s
Action
There is no edge for traders until after the
election, so keep your powder dry unless there is a significant intraday
overreaction that you can fade.
Have a good trading day,
Kevin Haggerty
P.S. Trade with me for a year.
Click here for details.