Volatility Bands Are Simply ‘Gold’ Day In And Day Out
What Wednesday’s Action Tells You
The major indices closed just pennies below the
previous day and the travel range was very narrow for most of the day until
a quick break below 1058 on the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) to a 1053.41 intraday low
on the 3:10 p.m. ET bar, and then a 6-point rally into the close of 1059.05,
just below the previous day’s 1060.18 close. Prior to that late action, the
SPX traded in a 5-point range between 1063 – 1058. When the major indices get
rangebound, individual stocks are much better to daytrade because you can scroll
and always find something going on that is making a move or is extended. When
the SPX traded below its 20-day EMA of 1057, it made its intraday low just above
the 1.0 volatility band of 1051.93, then rallied. The volatility
bands are simply “gold” day in and day out.
NYSE volume was once again 1.4 billion, with a
volume ratio of 37 as the four-day MA is now 40. Breadth was -748 with the four-day
MA of -185 and five-day RSI of 45. You must be getting a better feel by now
for how the short-term momentum just keeps rolling between the supply/demand
and the emotional reactions to news and reports of various kinds, all of which
is accelerated by different program and hedge fund agendas.
| size=2> |
Thursday
12/4 |
Friday
12/5 |
Monday 12/8
|
Tuesday
12/9 |
Wednesday
12/10 |
| color=#0000ff>Index | |||||
| color=#0000ff>SPX | |||||
| color=#0000ff>High |
1070.37
|
1068.41
|
1069.59
|
1071.94
|
1063.02
|
| color=#0000ff>Low |
1063.16
|
1060.21
|
1060.93
|
1059.16
|
1053.41
|
| color=#0000ff>Close |
1069.72
|
1061.50
|
1069.20
|
1060.18
|
1059.05
|
| color=#0000ff>% |
+0.5
|
-0.8
|
+0.7
|
-0.9
|
-0.1
|
| color=#0000ff>Range |
7.2
|
6.9
|
8.7
|
12.8
|
9.6
|
| color=#0000ff>% Range |
91
|
19
|
95
|
8
|
59
|
| color=#0000ff>INDU |
9931
|
9863
|
9965
|
9923
|
9922
|
| color=#0000ff>% |
+0.6
|
-0.7
|
+1.0
|
-0.4
|
-.02
|
| color=#0000ff>Nasdaq |
1969
|
1938
|
1949
|
1908
|
1905
|
| color=#0000ff>% |
+0.4
|
-1.6
|
+0.6
|
-2.1
|
-0.2
|
| color=#0000ff>QQQ |
35.63
|
35.05
|
35.26
|
34.43
|
34.56
|
| color=#0000ff>% |
+1.1
|
-1.6
|
+0.6
|
-2.3
|
+0.4
|
| color=#0000ff>NYSE | |||||
| color=#0000ff>T. VOL |
1.38
|
1.22
|
1.19
|
1.42
|
1.41
|
| color=#0000ff>U. VOL |
688
|
370
|
738
|
410
|
515
|
| color=#0000ff>D. VOL |
689
|
830
|
438
|
999
|
880
|
| color=#0000ff>VR |
50
|
31
|
63
|
29
|
37
|
| color=#0000ff>4 MA |
55
|
42
|
47
|
43
|
40
|
| color=#0000ff>5 RSI |
72
|
53
|
64
|
47
|
45
|
| color=#0000ff>ADV |
1605
|
1437
|
2157
|
1285
|
1277
|
| color=#0000ff>DEC |
1641
|
1787
|
1088
|
1994
|
2025
|
| color=#0000ff>A-D |
-36
|
-350
|
+1069
|
-709
|
-748
|
| color=#0000ff>4 MA |
+312
|
-159
|
+113
|
-7
|
-185
|
| color=#0000ff>SECTORS | |||||
| color=#0000ff>SMH |
-0.6
|
-3.6
|
-0.2
|
-4.2
|
+1.2
|
| color=#0000ff>BKX |
-.03
|
-0.9
|
+1.3
|
-1.3
|
-0.3
|
| color=#0000ff>XBD |
-0.9
|
-1.4
|
+1.1
|
-1.8
|
-1.1
|
| color=#0000ff>RTH |
-0.4
|
-0.9
|
+0.1
|
-1.1
|
-0.6
|
| color=#0000ff>CYC |
-.05
|
-1.0
|
+1.3
|
+0.2
|
-1.1
|
| color=#0000ff>PPH |
+0.2
|
-0.5
|
+0.9
|
-0.5
|
-0.5
|
| color=#0000ff>OIH |
+3.4
|
+2.3
|
+0.1
|
-0.3
|
+0.4
|
| color=#0000ff>BBH |
-0.3
|
-0.8
|
-0.1
|
-0.7
|
-0.4
|
| color=#0000ff>TLT |
+0.2
|
+1.6
|
-0.7
|
-0.7
|
+0.2
|
| color=#0000ff>XAU |
-2.6
|
+1.8
|
-0.3
|
-2.9
|
-4.4
|
For Active Traders
1057 on the SPX is the 20-day EMA, and it is also
the .707 retracement to the 1177 swing point high and the 1.618 Fib extension
of the 954 – 789 leg down. 1060 is the .382 retracement to the 1530 secondary
SPX high. This zone of confluence had put a lid on the SPX for 10 trading days
from 11/3 – 11/14 and now price is churning around this level on the way back
down from the 1068 .382 retracement to the all-time 1553 SPX high, in addition
to a confluence of seven other numbers from 1070 – 1074. This 1050 – 1075 zone
has been anticipated well in advance in many previous commentaries, so it should
be no surprise that price has been erratic in this zone.
In the major sectors, cyclicals were -1.1%,
and a
partial XLB short was taken in this corner below the low of the high day on
Tuesday. This will be kept on and the hedge against it will be to take any
good
intraday long setups in some of the primary weighted stocks like
(
DD |
Quote |
Chart |
News |
PowerRating),
(
DOW |
Quote |
Chart |
News |
PowerRating),
(
AA |
Quote |
Chart |
News |
PowerRating),
(
IP |
Quote |
Chart |
News |
PowerRating),
(
NEM |
Quote |
Chart |
News |
PowerRating) and
(
WY |
Quote |
Chart |
News |
PowerRating), which comprise 53.4%
weighting of the XLB. Yesterday, the XLB closed at 25.38 with components AA
-3.6%, Dow -1.0%,
(
ROH |
Quote |
Chart |
News |
PowerRating) -2.2% and
(
PPG |
Quote |
Chart |
News |
PowerRating) -2.0%, just to name a few.
The
multi-nationals have been strong as the Dollar has declined, and maybe some
institutions are ringing the register anticipating an oversold reflex in the
Dollar, not to mention the fact that they’re very extended for
smokestacks.
The
(
SMH |
Quote |
Chart |
News |
PowerRating) had a nice reflex trade
yesterday
for traders, as the SMH hit 39.10, a number you were alerted to in
yesterday’s
commentary that proved to be the intraday low yesterday and was the signal
bar
for an RST entry above 39.32. This trade ran +1.5% from entry to 39.92
before it
ranged out. The Tuesday range between 39.92 – 39.10 is today’s focus both
ways.
There was a significant increase in SMH volume yesterday, so stay involved.
I
have included that chart in today’s commentary.
Yesterday’s chop was frustrating for S&P
futures
traders, as the E-mini was in a Slim Jim from the 2:20 p.m. bar on Tuesday
through 10:00 a.m. yesterday. This Slim Jim range was 1061 – 1058.76.
Yesterday
it popped out of this range twice, and below it twice. The only one of those
moves that made a few pennies was the second break below 1058, and by then
most
traders had backed away out of frustration.
I have included an update today on the Nasdaq Composite
chart which shows another new high to 2001 and a corresponding lower MACD high,
which is now a triple negative divergence. The primary index to follow at all
times is the SPX. The only time the Nasdaq is very useful is when technology
and small caps are a primary focus in leading the market like they have during
this run from the October 2002 lows. Therefore, we are watching the Nasdaq and
the RUT very closely for any leading indicator that this move has been aborted.
This negative divergence obviously puts you on alert for any potential longer-term
price pattern that can mean a more significant retracement if the Nasdaq and
RUT start to roll over or have one of the 1,2,3 or RST top reversal patterns
which they don’t have right now.
Today’s
Action
The Nasdaq closed at 1905 yesterday, just
below
its 50-day EMA of 1914. The key swing point low price is 1878 with the
89-day
EMA at 1863. SMHs and NQs will provide better daytrading opportunities today
at
the current levels as they are more oversold than the SPX and
Dow.
Have a good trading day,
Kevin Haggerty
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