Trail Stops And Manage The Trade
What Wednesday’s Action Tells
You
It was trend up for the major indices right
from
the gap-up opening with the initial intraday highs made on the 2:05 p.m. ET
bar
at 117.92 for the
(
SPY |
Quote |
Chart |
News |
PowerRating) and 1179.46 for the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating). The
+2.0
volatility band yesterday for the SPY was 118.04 and 1180.20 for the SPX.
This
set up an RST sell below 117.80 which was also at the 480 EMA (RST on
five-minute chart, not daily). 117.90 – 118 has been the resistance on five
tries since last Thursday. The SPY traded to 117.44 after entry and then
reversed at the 240 EMA which was also the sixth point for an RST buy above
117.61, which in this case was to cover the short, but not to go long
because of
the already extended move off of Tuesday’s 3:55 p.m. 116.25 low (+1.4%). The
(
DIA |
Quote |
Chart |
News |
PowerRating) was +1.3% from the price-zone low of 103.86. This intraday trade
on
the five-minute chart has nothing to do with any short-term position trade
you
might have initiated on Tuesday in this zone, which has already moved to a
breakeven stop if bought below 117. After the SPY RST short cover, it traded
to
a 118.18 intraday high and closing there, +1.4% on the day. The SPX finished
at
1181.41, +1.4%, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) at 10,541, +1.3%, the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) at
36.73,
+1.9% and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +1.6% to 2006.
NYSE volume was 1.67 billion shares with the
volume ratio one-sided at 84 and breadth +1726. The elephants came out of
the
woods preceding month-end. All of the primary sectors were in line or better
than the SPX. The semis, industrials and basics led with the
(
SMH |
Quote |
Chart |
News |
PowerRating)
+2.2%,
XLI +1.9%, XLB +1.7% and XBD (brokers) +1.7%. The focus lists stocks
trampled
the SPX with 26 stocks > +3.0% and 24 > +2.0%. For Inner
Circle
members, the XLE was +3.0% from our level set in the Monday session. The XLE
made a 40.78 intraday low, reversing up to 42.08, closing at 42.02.
There is nothing more to say about the
short-term
position zone which had been anticipated and a position established at the
lowest common denominator, so it is now just trailing stops and managing the
trade while others debate the market action. You have to take the
Generals’
Pullback trade to the rising longer-term moving averages because it is an
excellent risk/reward trade, especially since it was extended on a standard
deviation basis and certainly short-term oversold. We cannot know duration
or
extent, but we can anticipate retracement levels and decide based on the
price
action when to start taking profits should there be any follow through with
early April institutional money.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.