Up Again, Down Again, Like A Bucket In A Well
What’s
to say — other than that I
hope you caught the trade off the 1171 .618 retracement to the 1082 April low on
the SPX cash. You have had it well in advance so certainly a reason for alert,
and then you got a 1,2,3 Higher Bottom entry on your five-minute charts which
was above 1172 on the SPX cash. If you trade the futures, it was an 11 point run
from 1179 to 1190.
The intraday low on the SPX
cash was 1168.46. The 1,2,3 entry was also in conjunction with a move above the
8-period moving average of the high and the 5-period EMA of the last which was
above the 8-period MA of the high. It set up right in your face as daytraders
but the chatter on the TradersWire Interactive was 90% negative at the time of
reversal pattern entry. FYI, that will never change, so take the trades at those
key zones when they set up because your reward-to-risk is very high as long as
you are capable of hitting the ejection button which, in this case, was just a
few index points below entry.
With all the chaos in the
techs and the tech world, the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) has traded with remarkable
symmetry as it has declined 22.9% from the 5/23/01 2074 high after a 54% rally
from the April 1349 low. Even the 7/3 minor cycle high and the 7/10 cycle low
were right in step. A 10%-12% rally would not be a surprise from the 1600 low,
based on the five legs from the 2074 high. (I will cover this symmetry and
sequence in Las Vegas.)
So let’s see. Coming into
today, we have the
(
MSFT |
Quote |
Chart |
News |
PowerRating) catalyst;
(
MOT |
Quote |
Chart |
News |
PowerRating) — which I call “the dog
of dogs” — saying it sees semiconductors running for daylight again. Talk
about an “on again, off again” story as semis like
(
KLAC |
Quote |
Chart |
News |
PowerRating) have
had four up legs and four down legs since April. Quick, get me a lawyer for the
whiplash. Bottom line is for any sustained upturn in techs, the semis must be a
leader. The good news is that by
now probably 90% of you don’t believe the news hype, good or bad, so you are
well on your road to success in trading what is.
Pre-opening, I see the
S&Ps +14, the NDX futures +65, also the semis being bid up in Instinet along
with some recent good shorts like
(
MERQ |
Quote |
Chart |
News |
PowerRating),
(
VRTS |
Quote |
Chart |
News |
PowerRating) and
(
CIEN |
Quote |
Chart |
News |
PowerRating), as
the shorts run to cover part of their positions, hoping to roll them out higher.
When they gap them open and you fade the emotion, such as upside Trapdoors
and/or Volatility Bands, don’t expect the world to crash in the contra move
down. If you take the shorts, be quick to cover and take money off the table,
moving your stop to breakeven on the balance of your position. Then you are
looking for any pullback pattern after at least a three-bar pullback, then a
resumption of the move in the direction of the open.
Stocks
Today
(September
|
||
Fair Value
|
Buy
|
Sell
|
6.25
|
7.50 |
|
Semis: If the rally is to
continue for more than a couple of days, these stocks must go, so after the early
gaps look for pullback setups in:
(
KLAC |
Quote |
Chart |
News |
PowerRating),
(
NVLS |
Quote |
Chart |
News |
PowerRating),
(
MU |
Quote |
Chart |
News |
PowerRating),
(
QLGC |
Quote |
Chart |
News |
PowerRating)
(which is at the low end of its trading range), and
(
BRCM |
Quote |
Chart |
News |
PowerRating).
Other stocks are
(
UNH |
Quote |
Chart |
News |
PowerRating),
(
HCR |
Quote |
Chart |
News |
PowerRating) and
(
HCA |
Quote |
Chart |
News |
PowerRating) if the Generals want to extend these healthcare stocks
some more.
Also
(
PBI |
Quote |
Chart |
News |
PowerRating),
(
FISV |
Quote |
Chart |
News |
PowerRating),
(
TEVA |
Quote |
Chart |
News |
PowerRating),
(
FRX |
Quote |
Chart |
News |
PowerRating),
(
ELN |
Quote |
Chart |
News |
PowerRating) and
(
AT |
Quote |
Chart |
News |
PowerRating).
In the financials,
(
KEY |
Quote |
Chart |
News |
PowerRating),
(
FITB |
Quote |
Chart |
News |
PowerRating),
(
PVN |
Quote |
Chart |
News |
PowerRating) and
(
COF |
Quote |
Chart |
News |
PowerRating). Also
(
LEH |
Quote |
Chart |
News |
PowerRating) in the broker
dealers.
Bottom fishing: Take a look
at
(
SLB |
Quote |
Chart |
News |
PowerRating) which had the most volume yesterday and a close in the top of the
range — it’s the most volume since April.
Also watch the rails which
have been good to us and the volume has preceded the move. Keep
(
CSX |
Quote |
Chart |
News |
PowerRating),
(
UNP |
Quote |
Chart |
News |
PowerRating),
(
NSC |
Quote |
Chart |
News |
PowerRating) on your screens for any kind of pullbacks.
Have a good trading day.
Wednesday’s
S&P 500 five-minute chart with 8-,
20-, 60- and 260-period
EMAs
Wednesday’s
NYSE TICK five-minute chart
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