This Can Make A Major Difference In How Your Year Turns Out
What Friday’s Action Tells You
After the wide-range-bar day on Thursday taking
the SPX
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$SPX.X |
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8.4 points on Friday vs. the 14.4 points on Thursday, but NYSE volume stayed
about the same at 1.45 billion shares, as option expiration activity was
certainly more active on Thursday. The volume ratio was neutral at 46, as was
breadth at +246. The SPX closed at 1036.31, -0.3% on the day and +1.7% for the
week, which was the third successive week with higher highs and lows. The
intraday low was 1031.89, so it held the breakout level from Thursday. Both the
Nasdaq
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$INDU |
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the
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QQQ |
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the major indices, except for the
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OIH |
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PPH |
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With Friday being a neutral day, there was no
major common thread in the S&P 500 index stocks, other than an
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SLB |
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had a wide-range breakout out of the range, and also
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BHI |
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RIG |
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all oil service-related stocks that advanced in price on increased volume.
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MSFT |
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There has been in increase in volume and a
decline in price in some of the momentum stocks that were making new 52-week
highs, so the register is definitely being rung by some players. Greed has
gotten out of hand on many of them, as analysts follow price up with
justification stories and, of course, were nowhere to be found at the lows.
From the Change In Direction screen, 11 of the 19
stocks were energy related, with the biggest volume increase coming in
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APC |
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NE |
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BHI |
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PTEN |
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BJS |
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you keep them in focus today should the Generals follow through.
For Active Traders
It was a lean day for major index daytraders, as
the SPX opened down and then two Trap Doors on the
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SPY |
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.25 before trading down to a 103.40 intraday low on the 2:00 p.m. ET bar. This
was the level of the Slim Jim closing range on Wednesday, followed by the
Thursday morning breakout. The SPY rallied Friday from the 103.40 intraday low
to 104 before fading to close at 103.67. The
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SMH |
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EMA on the 9:55 a.m. bar and the Trap Door entry carried about .45 to a 37.95
high, before fading for the remainder of the session, closing at 37.56.
If you trade my 1,2,3 strategy and scroll the key
big cap stocks, there was better opportunity in the individual stocks, such as
(
AMGN |
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late rally. You might have also caught the Slim Jim in
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GILD |
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between 60.75 and 60.50, then broke out and traded down to 59.85, closing at
59.96. Prior to the rally that started between 2:00 and 2:30 p.m.,
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IBM |
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formed a Slim Jim near the highs between 93 and 92.75. This breakout to the
upside on the 2:30 p.m. bar ran +.50 before closing at 93.28. Since breaking out
of the range above 90, IBM has provided daytrading opportunities each day. The
point is if you are limited to trading just the futures or index proxies, you
miss out on multiple individual stock setups each day, which can make a major
difference on how your year turns out.
Today’s Action
Friday’s market action did nothing to alter
trend, as the SPX closed on an inside day above all of its 8-, 20-, 50- and
200-day EMAs. New highs are above 104.70, but having closed at 103.67, any long
entries today will be well below that, ex any gap-up opening.
I am doing this Sunday night for Monday, so I
can’t see the future pre-opening, but the post-expiration bias is down.
The
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QQQ |
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DIA |
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pulled back close to breakout levels. The Dow closed at 9645, having closed
above the 9600 level resistance for the past two days. The SMHs are also still
above all of the daily EMAs, having closed at 37.56 and have been in the
confluence zone for the past 20 days, and that too will soon be resolved. The
high close for the past eight days is 37.73, so key off that for any
continuation long entry. The 20-day EMA is below at 36.68 in case of any early
air pocket.
The exits will get crowded if any of the Generals
start lightening up on their semi allocation after the sensational move the
sector has made off the lows. Many of the hedge fund money managers that I know
that can use options and plan to hold their major position in the SMHs that they
bought early between 17.32 and 22 and/or again on the 1,2,3 higher bottom at
20.36 have already locked in the major portion of their gains using the January
’04 puts. Of course, they can still participate in most of the upside. Those
that don’t have major positions in the SMHs have done the same in individual
stocks that they plan to hold.
The weekly outside bar for the Sept. 8 week had
the most SMH volume since they started trading in June of 2000. The SMH hit its
rally high that week of 38.85, so there was certainly money being taken off the
table. A double outside bar pattern on a weekly chart, like the SMH has now, is
usually resolved with a very tradable move in either direction.
Have a good trading day,
Kevin Haggerty
