Trap Doors, Trap Doors, Trap Doors
What Tuesday’s Action Tells
You
There is no need to spend any time on
yesterday’s
market action between 9:30 a.m. – 4:00 p.m. ET, because there was none. The
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1115.14, almost flat at +0.07% with a daily range
of
just 3.3 points between the 1116.30 high and 1113 low. Enough
said.
NYSE volume struggled to get to 1.19 billion
shares, with the volume ratio 55 and 4 MA neutral at 47. Breadth was +169
and
the 4 MA now +111. The 5 RSI closed at 38.
The XBD, -0.9% led by
(
MER |
Quote |
Chart |
News |
PowerRating), and the
(
OIH |
Quote |
Chart |
News |
PowerRating) were the red sectors, while the others were small green with the
RTH
at +1.1%. It should be obvious to you that the 2:00 p.m. Slim Jim program
surge
the other day was just that, as no Generals showed up yesterday. The semis
were
quiet following the MER downgrade, and at 4:00 p.m., the
(
SMH |
Quote |
Chart |
News |
PowerRating) was
actually
almost unchanged at +0.03%, closing at 34.68.
However, the game got more interesting after
the
close as
(
INTC |
Quote |
Chart |
News |
PowerRating) reported. CNBC was showing you a countdown to
announcement
similar to Midnight Madness in college basketball. INTC had closed at 26.14
and
at 6:30 p.m. was -4.8% to 24.89 in after-hours trading on 6.7 million
shares.
The
(
QQQ |
Quote |
Chart |
News |
PowerRating)s declined -0.8% to 35.27 on 2.0 million shares, while the SMH
was
-2.2% to 33.92 on just 226,000 shares. The
(
SPY |
Quote |
Chart |
News |
PowerRating) drifted to 111.45,
-0.4%.
On the other side of that red move was
(
JNPR |
Quote |
Chart |
News |
PowerRating) that was +9.8% on 3.9
million
shares. Those of you who attended the seminar should review that
“Core
Framework” as it will be in play this morning if the early red
futures I see
at 7:30 a.m. carry into the opening. The S&Ps are -5, Nasdaq -14 and Dow
-39.
Today’s
Action
The QQQs closed in after-hours at 35.27 with
the
200-day EMA at 35.25 and 5 RSI below 20. The SMH hit 33.92 and is
approaching
its first confluence zone of 33 – 33.30. The next zone is the .50
retracement to
17.32 at 31.55 and a 1.618 Fib extension at 31.71 (34.50 – 39). The
-1.5 and -2.0 volatility bands based on the 34.68 4:00 p.m. close are 33.77
and
33.47 vs. the 33.92 level in after-hours trading. For the QQQs, the -1.5
volatility band is 34.94 and the -2.0 band is 34.74.
You now have a frame of reference for this
morning’s emotion which means Trap Doors, Gap Pullbacks, and the other
First-Hour module strategies, all of which are based on the “Core
Framework“.
Do the same volatility band drill for the SPY/DIA, but the QQQ and the SMH
are
at a better confluence zone, especially on early weakness.
The SMH at 33.92 was -11.0% in eight days
from
its 38.05 retracement to the 200-day EMA. INTC having traded below 25.61
puts it in
RST territory and also the .50 retracement to the 12.95 October 2002 low is
at
23.78 vs. the 24.88 after-hours price. TradingMarkets was able to get the
volatility band service back up, so for those of you who have the service
and
trade individual stocks, there could be some good early opportunity. You
also
have the energy stocks to focus on from previous commentary that will be
definitely pushed again, in addition to some of the basics that generally
outperform in the late stages of a bull market.
Have your individual semi stock volatility
bands
right in front of you, as I see INTC is trading at 24.60
pre-market.
Have a good trading day,
Kevin Haggerty