Trap Doors Again
All of
the major indices declined yesterday, with
the Nasdaq
(
$COMPQ |
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PowerRating) leading at -3.0% as it accelerated through the 1200
level. See the Sept.
18 commentary. The Dow
(
$INDU |
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PowerRating) was -1.4%, as was the SPX
(
$SPX.X |
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PowerRating). Not unexpected that the Nasdaq and NDX 100
(
$NDX.X |
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PowerRating),
which was -3.3% yesterday, would see some selling into quarter’s end, as the
Generals sell more of their portfolio dogs. The
semis at -5.1% and biotech at -4.0% led sectors down, while the BKX managed a
slight gain of +0.4%. NYSE volume
was average at 1.36 billion, a volume ratio of 13, with the three- and four-day
moving averages still at an oversold 30. Breadth was a negative, -1383, also
oversold and confirming the volume ratio.
The first setup for the
SPX in the awareness zone yesterday was the 10:50 a.m. ET reversal signal bar.
The high of that signal bar was 826.43 and low was 825.76. The rally was to
835.15, but the index then traded back down to 826.79 on the 3:10 p.m. ET bar.
There was a last-hour program-initiated rally to 837.83 before closing at
833.70. The net result was still negative at day’s end which meant no Change in
Direction day, as the SPX put in another lower high and lower low day. The July
24 – Aug. 22 rally was 21 trading days, and yesterday was the 21st decline day.
The
(
SMH |
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PowerRating)s have declined 21% in eight days, hitting an intraday low of 19
yesterday. As with the SPX, nothing good can happen until there is a close above
the high of the low day.
At 7:15 a.m. ET as I do
this this morning, the S&P futures are -14, the Dow -124, and the Nasdaq
-11, so we are thinking Trap Doors, etc., once again. If you haven’t become
adept at Trap Doors and 1,2,3s over the past 21 days, it’s not because you
haven’t seen them day after day as the pre-opening future selloffs initiate the
gap-down openings. There hasn’t been one session without a contra move after the
gap-down opening, so they do provide opportunity for the daytraders and ulcers
for position traders. All news is negative now, with Iraq being the heavyweight.
When the market reverses direction, the fundamental moves will still be
predominantly negative, as the major indices advance on renewed perception.
In the sectors, the
(
BBH |
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Chart |
News |
PowerRating)s hit an intraday low yesterday of 72.75 vs. its 75.94 .618 retracement
to its July 11 65.40 low and the .786 level at 71.31. The BBH short was trading
below its 78 – 77 level, but down here you must be alert for intraday long
reversal setups. That goes for the SMHs even more so, and certainly a Change in
Direction day is needed with a close above the high of the low day in order to
hold the intraday position you may enter.
Stocks
Today
Some individual stocks to
focus on today from the long side include
(
NOC |
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Chart |
News |
PowerRating),
(
LMT |
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Chart |
News |
PowerRating) and
(
GD |
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News |
PowerRating). All
decent long setups.
Also, you can look at
(
FRX |
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PowerRating),
(
BR |
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News |
PowerRating),
(
SLM |
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News |
PowerRating),
(
APOL |
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News |
PowerRating),
(
PNRA |
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News |
PowerRating),
(
TARO |
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PowerRating) and
(
TEVA |
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PowerRating).
On the short side because
we’re in the awareness zone, stay with the proxies if there is any continuation
downside today.
A couple of other stocks
if they come back for the financials and there’s any contra move this morning,
you might also look at
(
FITB |
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Chart |
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PowerRating),
(
BAC |
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PowerRating) and
(
WFC |
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Chart |
News |
PowerRating). Keep those on your
radar.
Have a good trading day.
Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Monday’s NYSE TICKS