The Rules
It was
an early down yesterday to the
intraday low of 868 by the 10:40 a.m. ET bar, which is also the 20-day EMA.
There was a quick pocket of air below the 873 lower boundary of the trading
range, but no carry through, as the SPX went sideways until the mark up began
just after 2:30 p.m., a familiar number for those of you that read this
commentary daily. Hope all you sequence traders caught the RST.
The program mark up
carried the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) right back up to 886.28, closing at 882.31,
still clinging to the October gains. The regulators knocked off Arthur Andersen,
but I hope they don’t end this mark up and program nirvana because it will
curtail so many of these Mickey Mouse, no-reason, but profitable daytrades that
are just noise in a bigger-business-cycle picture.
The 10:00 a.m. knife down
on Consumer Confidence with the big spike in
(
SPY |
Quote |
Chart |
News |
PowerRating) volume was a layup for
the pros to initiate one side of their trade. The first assist on the goal went
to, you guessed it, the CNBC empty suits. All was forgotten, as the pros took
the SPX right back up into the close where they initiated the knife down at
10:00 a.m. Been there, seen that, done that. The Generals did not flood the
floor with sell orders on the much-revised Confidence number, nor did they tell
their brokers to “buy them because we love them” at 2:30 p.m. Then to add insult
to injury, CNBC dragged some $2.00 broker from the NYSE floor in front of the
camera that tells us about some economic or geopolitical reason for the
movement. He has no clue. And if you listen to any of them, I will give you a
good deal on the Brooklyn Bridge.
I guess it was the wrong
side of the bed this morning. The point is that it’s a “Game,” and you should
understand the rules when you are short-term trading. Reality prevails long term
as the business cycle works just as it has since the beginning of time.
For today, we see the SPX
50-day EMA below at 875, with the 89-day EMA at 903.21, and a confluence of
numbers from 904 -910, with the .786 retracement to 965 up above at 923. Then
there is the head-and-shoulder resistance and a 2.0 intermediate volatility band
from 930 – 935. There is also the down trend line, 945 – 950. I look at this
resistance as only about a 4.0% opportunity before a pullback, provided the SPX
can break out above the upper boundary of this range at 907.44, the intraday
high, and 899.72, the high close of this range. To me that means no edge short
term before a pullback.
If they open neutral this
morning to soft, then I will look to the 8-day EMA at 883.62 for possible early
entry on the futures/SPYs or any big cap stocks that set up. With all that’s
going on in the regulatory world these days, maybe the institutions won’t be so
aggressive on the mark up today and tomorrow and just walk away from the sell
side, and then all we would get would be chop.
Have a good trading day.
Five-minute chart of
Tuesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Tuesday’s NYSE TICKS