This Is Where I’m Looking For Setups Today
What Wednesday’s Action Tells
You
The market had a Greenspan air pocket even if he
didn’t say anything. Gotta love those futures, because without them there would have been no air pocket. These kind of drops create opportunity for the trader.
True to form on a Fed meeting day, the major indices went sideways in Slim Jims
until 2:15 PM and then the reaction started. This was a knife down from the
Slim Jims with no bounce until the last 10 minutes, where the SPY moved of its
112.94 low to 113.40, closing at 113.37. The NYSE volume expanded to 1.8 billion;
the volume ratio was 21, there was 1.45 billion down. The breadth was also very
negative at -1467 with the 4-day moving average now -347. In fact, breadth has
been very weak since last Thursday as price traded into the SPX 1150 – 1160
zone. It was a tired market coming into yesterday, and for many of the hedge
funds, “long term” is after lunch so it doesn’t take much for them
to lighten up. It was a -1.4% day for the SPX, hitting an 1126.50 low closing
1128.48. The Dow was -1.3%, dropping down to the lower end of its trading range
at 10468. The QQQs ended at 37.11, -1.7% on a big volume wide range bar day
of 128.1 million shares – the most since June 6 2003. Five day RSI is
2761, so it is back to the reflex up zone, especially the 36.65 to 36 level.
The primary sectors were all red, led by the brokers, the XBD -3.3%, and RTH
-2.5%.
| size=2> |
Thursday
1/22 |
Friday
1/23 |
Monday
1/26 |
Tuesday
1/27 |
Wednesday
1/28 |
| color=#0000ff>Index | |||||
| color=#0000ff>SPX | |||||
| color=#0000ff>High |
1150.51
|
1150.31
|
1155.38
|
1155.37
|
1149.14
|
| color=#0000ff>Low |
1143.01
|
1136.85
|
1141.01
|
1144.05
|
1126.50
|
| color=#0000ff>Close |
1143.94
|
1141.55
|
1155.37
|
1144.05
|
1128.48
|
| color=#0000ff>% |
-0.3
|
-0.2
|
+1.2
|
-1.0
|
-1.4
|
| color=#0000ff>Range |
7.5
|
13.5
|
14.4
|
11.3
|
22.6
|
| color=#0000ff>% Range |
12
|
35
|
100
|
0
|
9
|
| color=#0000ff>INDU |
10623
|
10568
|
10703
|
10609
|
10468
|
| color=#0000ff>% |
-0.4
|
-0.5
|
+1.3
|
-0.9
|
-1.3
|
| color=#0000ff>Nasdaq |
2119
|
2124
|
2154
|
2116
|
2077
|
| color=#0000ff>% |
-1.1
|
+0.2
|
+1.4
|
-1.8
|
-1.8
|
| color=#0000ff>QQQ |
38.11
|
38.04
|
38.61
|
37.75
|
37.11
|
| color=#0000ff>% |
-0.7
|
-0.3
|
+1.6
|
-2.2
|
-1.7
|
| color=#0000ff>NYSE |
|
|
|
|
|
| color=#0000ff>T. VOL |
1.69
|
1.51
|
1.40
|
1.62
|
1.81
|
| color=#0000ff>U. VOL |
691
|
690
|
974
|
630
|
383
|
| color=#0000ff>D. VOL |
990
|
763
|
404
|
983
|
1.45
|
| color=#0000ff>VR |
41
|
47
|
71
|
39
|
21
|
| color=#0000ff>4 MA |
60
|
53
|
55
|
50
|
44
|
| color=#0000ff>5 RSI |
70
|
63
|
79
|
55
|
36
|
| color=#0000ff>ADV |
1717
|
1706
|
1872
|
1421
|
943
|
| color=#0000ff>DEC |
1580
|
+1600
|
1440
|
1878
|
2410
|
| color=#0000ff>A-D |
+137
|
+106
|
+432
|
-457
|
-1467
|
| color=#0000ff>4 MA |
+574
|
+475
|
+382
|
+55
|
-347
|
| color=#0000ff>SECTORS |
|
|
|
|
|
| color=#0000ff>SMH |
-1.6
|
-1.3
|
+2.2
|
-3.4
|
-0.6
|
| color=#0000ff>BKX |
-.07
|
-0.4
|
+1.4
|
-0.8
|
-1.7
|
| color=#0000ff>XBD |
-1.9
|
+.04
|
+1.3
|
-1.5
|
-3.3
|
| color=#0000ff>RTH |
+.09
|
+0.8
|
+0.3
|
-0.7
|
-2.5
|
| color=#0000ff>CYC |
-0.3
|
-1.0
|
+1.0
|
-0.9
|
-1.9
|
| color=#0000ff>PPH |
-0.1
|
-0.6
|
+1.5
|
-0.7
|
-1.0
|
| color=#0000ff>OIH |
-1.4
|
-0.3
|
+1.2
|
-0.2
|
-0.5
|
| color=#0000ff>BBH |
-0.5
|
+1.4
|
+1.5
|
-1.6
|
-0.9
|
| color=#0000ff>TLT |
+0.7
|
-1.2
|
-0.7
|
+0.6
|
-1.0
|
| color=#0000ff>XAU |
-1.9
|
-1.5
|
-0.7
|
+1.9
|
-2.7
|
^next^
The semis acted the best on a relative basis at
-0.6% and they have led the downside and have been declining for 11 days from
the 45.78 high. The 5-day RSI is 2624 and my focus turns to the long side setups
now on an intraday basis. The SMH closed at 42, with the 50-day EMA at 42.32.
Micron Technology
(
MU |
Quote |
Chart |
News |
PowerRating) did its own thing again, closing at 16.11, +2.6% on
more than double its average volume I also see that a couple of chemicals
bucked the trend yesterday, with Dow
(
DOW |
Quote |
Chart |
News |
PowerRating) +1.3% on +120% of of its average
volume and Dupont
(
DD |
Quote |
Chart |
News |
PowerRating) +2.6% on +110% of its average volume. True to form,
some of the Generals reloaded on the pullback to the 200-day EMA. DD went from
42.52 on Tuesday to a 44.28 high yesterday, closing at 43.67. font>
Those of you that also have long synthetic
straddles on were very happy with yesterday’s drop. If we get an upside reflex
today or Friday we will get to make another adjustment. This corner is loving
this trade right now, especially coming into a negative bias in early February.
For Today
If there is an early red today I will look to the
QQQ and SMH for setups. The TLT (the long bond proxy) tends to be very friendly
when you sell into strength. They hit an 85.86 low yesterday down from 88.90
on Friday, and closed at 86.62. You can’t expect stocks to keep going up in
a recovery without rates moving up, and that’s why yesterday’s media commentary
and reaction to Greenspan was absolutely ridiculous. In fact, most of the time
during this rally when the bonds are red, stocks have been green. If this market
is going to continue, there’ll be a period of rates rising and stocks rising,
probably along with commodities.
Have a good day
Kevin Haggerty
