The Most Significant Quarter
The
early red futures carried through the opening and
down for the first half-hour, setting up some excellent Trap Doors and 1,2,3
entries from the 2.0 volatility bands on the major indices and HOLDRs. The SPX
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PowerRating) hit an 800.64 intraday low on the 10:30 a.m. ET bar vs. the 2.0
volatility band at 800.37. You got a 1,2,3 double bottom entry that carried up
to the 825 level, backing off the close at 814.22, or -1.5% on the day. It
was trend up after 10:30 a.m., with higher highs and lows, so there were
additional trade opportunities. The
DJX hit a 74.61 intraday low vs. the 74.37 2.0 volatility band and had a big run
up to a 76.84 high, closing at 75.81, -1.4% on the session.
The
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PowerRating)s had a
1,2,3 higher bottom entry after hitting the 18.90 intraday low vs. the 18.70 2.0
volatility band. They traded up to a 19.70 intraday high. Our other main focus,
which is the
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PowerRating)s, also gave us a 1,2,3 entry above 75.61 and had an
excellent run up to a 79.40 intraday high. They closed at 77.69. The entry was
from the .618 retracement zone of 75.94 found by framing the 65.40 to 93 leg on
the daily chart.
I read nothing into the
end-of-quarter day. They took out the 7533 July Dow
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PowerRating) low, and that
leaves the SPX 776 low as the magnet to hit.
NYSE volume expanded to
1.7 billion with the various programs, the volume ratio was 46, and breadth
-304. The market makers and specialists are loving the opening time period
overreactions, as am I, and I hope you are, too. As long as the regulators allow
the pre-NYSE-opening futures games to continue, it will be a daytrader’s
paradise and a position trader’s nightmare, unless of course, you are utilizing
options strategies.
As mentioned before, the
775.68 SPX low is a number that will probably get taken out soon, going the way
of the Dow and the Nasdaq, both of which have taken out their July lows. Before
we can head higher that low should be taken out and a positive divergence for
the SPX would be a surprise. The US dollar closed at its weekly lows and any
continued downside could be a negative catalyst short term.
The early futures are
green as I do this at 7:10 a.m. ET, with the S&Ps +8, Dow +67 and Nasdaq
+12, so maybe the gang anticipates some money being put to work by the Generals
the first few days of the quarter, which we have seen many times during this
bear market. Until some consistent buying pressure shows up by the Generals,
it’s intraday only and no position longs unless there is a profitable cushion at
day’s end for the proxies and HOLDRs, and in this volatility, I would also apply
that to shorts.
Have a good trading day.
Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Monday’s NYSE TICKS