To Hit Price Objective, Chips Must Participate
What Monday’s Action Tells
You
The market action was both narrow and
neutral, as
the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) daily range was just 4.6 points, while the volume
ratio
was 54 and breadth +369. NYSE volume was 1.45 billion shares as the SPX
closed
at 1183.82, minus less than a point, with the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) at 10,550,
+11
points. The
(
QQQ |
Quote |
Chart |
News |
PowerRating)s and Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) were each +0.4% to 38.83
and
2094. The QQQs were helped by the
(
SMH |
Quote |
Chart |
News |
PowerRating), which was +1.8%, and led the
primary sectors, with the RTH next at +1.0%. The
(
OIH |
Quote |
Chart |
News |
PowerRating) led the red
sectors
at -3.3% after having gained +4.3% the previous three days and closing at
78.70
which is approaching the 89-day EMA again for the third time. This has been
a
source of many profitable daytrades over the past 10 days. The
“Generals’
Pullback” (seminar manual and
sequence trading module) would be in play
at the
72 – 73 zone. The rest of the primary sectors were nondescript yesterday,
telling us nothing.
For Active
Traders
However, the narrow daily range yesterday was
not
without opportunity, as there were two RST sell patterns and one RST buy
pattern
in the ESZ4 for a total of 11 – 12 profit points vs. the 4.6 SPX daily
range.
The NQZ4 also gave traders the same combination of RST trades and like the
ESZ4,
closed at the top of its range.
Today’s
Action
The major indices are extended for sure into
the
current time zone this week, and reversal is the higher probability. The SPX
closed in a narrow range between 1184.48 – 1179.85, which was, in fact,
Monday’s
daily range. A breakout of that range could run to the 1190 level. However,
the
current angle of ascent for the SPX cannot be maintained much longer at the
current annualized rate of over +200%. The initial retracement levels of any
real meaning are 1161 and 1145.
The semis have picked up the pace, and as
previously mentioned, the chips must participate for the major indices to
continue the move to the 1254 .618 price objective to the 1553 high. The SMH
is
+5.5% the past three days, closing at 33.63 after a 33.79 intraday high.
This
puts price right at the key resistance zone from 34 – 35, which is certainly
a
show and tell for the SMH in its +22% rally (low-to-high) since the 09/06
27.78
low.
Any intraday short setups like RSTs, 1,2,3s
and
First-Hour Trap Doors will be taken if price works higher on Tuesday. Only
carryover the daytrade if there is a profit cushion at the end of the
day.
Have a good trading day,
Kevin Haggerty