Triple Witch/Oversold
It was
down and dirty for the first half-hour, as
the SPX
(
$SPX.X |
Quote |
Chart |
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PowerRating) dropped right to an 852.59 low from the previous close
of 869.46. It went sideways and then made a weak rally attempt out of a triangle
pattern that carried only to just under the .38 retracement level. This brief
reflex ended with a Kings and Queens short entry pattern at the 861 level, which
was also right at the 20-period EMA on your 15-minute chart. It went south below
all of its intraday EMAs, trading down to an intraday low of 843.09, closing at
843.34, -3.0% on the day. The Dow
(
$INDU |
Quote |
Chart |
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PowerRating) finished at 7942, which is
-2.8%, and the Nasdaq -2.9% at 1216.Â
NYSE volume was about the
same as Wednesday at 1.5 billion, a volume ratio of 13, which puts it at a very
oversold three-day average of 19, breadth was very negative at -1759 and has a
four-day moving average of -1011 to confirm the oversold volume ratio. All
sectors were down as much and more than the major indices.Â
You know my levels from yesterday’s
commentary. The SPX closed in the middle of that zone. There is a stronger
confluence at 825 – 835. Once the zone is entered, all we can do is look for
reversal entry patterns. I like to do that starting with an intraday pattern,
and then keep position if there is a cushion profit on the day. This is for
index proxies/HOLDRs only, not individual stocks in this current environment.
The early futures are
green, but it’s Triple Witch, which means who knows, but we should get a long
setup or two. Summed up, the market is short-term oversold in a strong cycle
time period and at an awareness zone, so the highest probability is a reflex up
into next week. The better buy would be a quick air pocket to the 825 – 835
zone, but markets certainly don’t listen to us.Â
Have a good trading day
and a great weekend.
Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Thursday’s NYSE TICKS