Time And Price Zone
What Monday’s Action Tells
You
Bullish sentimebnt euphoria, more positive economic
news and all of the stock market talk show drones hyping the market, and of
course, they were nowhere to be found when it mattered. It’s like taking that
old tie out that’s back in style. The major indices pushed ahead, reversing
Friday’s down action, as price advanced with no real selling pressure yesterday.
NYSE volume was 1.5 billion, with a volume ratio of 76 and a 4 MA of 59. Breadth
jumped to +1169 with the 4 MA only +458.
| size=2> |
Tuesday
12/30 |
Wed.
12/31 |
Thurs.
1/1 |
Friday
1/2 |
Monday
1/5 |
| color=#0000ff>Index |
|
|
|||
| color=#0000ff>SPX |
|
|
|
||
| color=#0000ff>High |
1109.75
|
1112.56
|
H
|
1118.85
|
1122.22
|
| color=#0000ff>Low |
1106.41
|
1106.21
|
|
1105.08
|
1108.48
|
| color=#0000ff>Close |
1109.64
|
1111.92
|
O
|
1108.49
|
1122.22
|
| color=#0000ff>% |
0
|
+0.2
|
|
-0.3
|
+1.2
|
| color=#0000ff>Range |
3.3
|
6.4
|
L
|
13.8
|
13.7
|
| color=#0000ff>% Range |
96
|
89
|
|
25
|
100
|
| color=#0000ff>INDU |
10425
|
10454
|
I
|
10410
|
10544
|
| color=#0000ff>% |
-0.2
|
+0.2
|
|
-0.4
|
+1.3
|
| color=#0000ff>Nasdaq |
2009
|
2003
|
D
|
2007
|
2047
|
| color=#0000ff>% |
+0.1
|
-0.3
|
|
+0.2
|
+2.0
|
| color=#0000ff>QQQ |
36.56
|
36.46
|
A
|
36.40
|
37.12
|
| color=#0000ff>% |
+.3
|
-0.3
|
|
-0.2
|
+2.1
|
| color=#0000ff>NYSE |
|
|
Y
|
|
|
| color=#0000ff>T. VOL |
978
|
985
|
|
1.1
|
1.50
|
| color=#0000ff>U. VOL |
513
|
521
|
|
593
|
1.13
|
| color=#0000ff>D. VOL |
413
|
434
|
|
526
|
364
|
| color=#0000ff>VR |
55
|
52
|
|
53
|
76
|
| color=#0000ff>4 MA |
65
|
66
|
63
|
59
|
|
| color=#0000ff>5 RSI |
88
|
89
|
74
|
84
|
|
| color=#0000ff>ADV |
1904
|
1561
|
1745
|
2242
|
|
| color=#0000ff>DEC |
1345
|
1698
|
1503
|
1073
|
|
| color=#0000ff>A-D |
+559
|
-137
|
+242
|
+1169
|
|
| color=#0000ff>4 MA |
+834
|
+770
|
+606
|
+458
|
|
| color=#0000ff>SECTORS |
|
|
|
||
| color=#0000ff>SMH |
-0.1
|
-0.5
|
-0.2
|
+3.6
|
|
| color=#0000ff>BKX |
+0.2
|
+0.1
|
-0.6
|
+0.8
|
|
| color=#0000ff>XBD |
+0.1
|
0
|
-0.4
|
+1.2
|
|
| color=#0000ff>RTH |
+0.3
|
+0.1
|
-1.9
|
+0.4
|
|
| color=#0000ff>CYC |
-0.7
|
+0.1
|
-0.5
|
+1.7
|
|
| color=#0000ff>PPH |
0
|
+0.5
|
+0.7
|
+1.1
|
|
| color=#0000ff>OIH |
0
|
-1.3
|
-0.3
|
+1.2
|
|
| color=#0000ff>BBH |
0
|
-0.5
|
+0.4
|
-0.5
|
|
| color=#0000ff>TLT |
-0.4
|
-0.4
|
-1.1
|
-0.2
|
|
| color=#0000ff>XAU |
-0.4
|
-0.8
|
+0.6
|
+3.1
|
For Active Traders
The major sectors were led by the
(
SMH |
Quote |
Chart |
News |
PowerRating)
+3.6%
and the cyclicals (CYC) +1.7%. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
were +1.2% and +1.3%, while the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) ended at 2047, +2.0%,
and
the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s at 37.12, +2.1%. This corner had taken the QQQs on the
breakout
of that 12-week trading-range box between 36 – 34, and they closed at 37.11
yesterday. The XLK was also taken out of the same type of trading range
above
20.25, and it closed at 21 yesterday. Both stops have now been moved to well
above breakeven.
^next^
Still on the short side are the
(
TLT |
Quote |
Chart |
News |
PowerRating)s
and
stops have been moved down well below breakeven, but the scale in short on
the
XLBs is still red, as they closed at 27.07 yesterday, but the full position
is
not complete yet. A defined short speculation play is the put position in
CTX
that was taken as CTX made a 1,2,3 lower top at 111.84, then re-crossed its
20-day EMA at 107.60 to the downside on a significant increase in volume
relative to its rally to the 1,2,3 lower top. CTX hit 100.90 yesterday,
closing
at 102.53. The first adjustment was made.
I have included the daily chart of CTX today
showing the 1,2,3 setup, and this is in a stock that had bottomed in March
of
2000, just as the SPX topped out and long bond yields were declining from
above
6.7% on the way to below 4.2% in June 2003. They have since rallied to 5.50%
and
are now in a flag pattern, closing at 5.17% yesterday. (See the $TYX weekly
chart.)
src=”https://tradingmarkets.com/media/2004/Haggerty/kh010604-03.gif”
width=”649″ height=”491″>
Seeing this flag, in addition to the array of
positive economic news, is why some of the index proxy profits were used to
play
the CTX, which has gone from 17.50 to 113.08 on Dec. 8. You have to assume
the
Generals are reducing position size, in addition to the anticipation of
higher
rates and ringing the register.
(
GE |
Quote |
Chart |
News |
PowerRating) and
(
MSFT |
Quote |
Chart |
News |
PowerRating) have continued to be
solid trades, but stops are very tight now at more than 50% of gains.
The percentage of stocks above their
longer-term
moving averages is the most I’ve seen in a long time. The percentage of all
stocks above their 200-day MA is 89%, while the NYSE breadth has over 90% of
stocks above both the 10- and 30-week MAs. The longer-term advance/decline
numbers are still rising, and the earliest interest rate indicators, which
are
Federal funds and the three-month T-Bill rate, are still trading below their
52-week EMAs on a yield basis.
It’s not uncommon in some business cycles for
stocks, interest rates and commodities to rise in concert as the cycle
matures,
and this is why 2004 could see some higher prices, as there is some more
room.
When rates start to rise, portfolio managers and the media counter with the
“earnings are soaring” story and the perception gets way ahead of
reality. Looks
to me like an air pocket is very near and is needed to digest the
accelerated
move over the past six weeks to set the table for any move higher. This, of
course, could be resolved in a sideways fashion, but we can’t know that as
we
are still human the last time I looked.
Yesterday the major indices were up,
sideways,
and up, but there were Slim Jims to play in the afternoon advance, like the
(
DIA |
Quote |
Chart |
News |
PowerRating)s and some other big-cap-correlated stocks. There were no real gap
pullback index long setups after the up opening, and if you played a Trap
Door
short around the 9:55 a.m. – 10:00 a.m. ET bars, you had to scratch the
trade as
price just drifted sideways, but not enough downside to even buy lunch.
Today’s
Action
January is a time zone in both trading days
and
calendar days, starting with Jan. 7. Jan. 12 and 13 have a confluence of
three
time numbers, and Jan. 27 is the 3.14 ratio of the Oct. 10, 2002, low to the
March 12, 2003, retracement bottom using the DIA as an example. The DIAs are
+10.1% low-to-high in 28 days since the last significant swing point low of
95.92, hitting a 105.63 intraday high yesterday. Jan. 13 is also the 34th
trading day since that 95.92 low. After this sharp angle of ascent, which is
the
10.1% move from 95.92, and in addition to the time zone we have entered,
this
corner will take advantage of any intraday short setups in the DIA and/or
other
index proxies/HOLDRs.
The SPX is also in a significant price zone,
especially that 1150 – 1160 level, which we are essentially in with
yesterday’s
1122 high. It’s good to be able to daytrade short the extended moves in
index
proxies against longer-term IRA index proxy positions which you are not
trying
to short-term market time because the primary trend is obviously up. If the
index proxies/HOLDRs short has a profit cushion at day’s end, you have the
option of carrying it over, assuming you are not just a pure
daytrader.
Have a good trading day,
Kevin Haggerty