Watch For Search-And-Destroy Today…Here’s Why
The
day started well, with an SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) long entry trade above the closing-range triangle, which also
crossed the 240 EMA on the five-minute chart and was a re-cross of the 12-month
EMA. The opening volume was strong across the board and to the buy side; all of
the top market capitalization stocks in the S&P cash index were all green; TRIN
was below 60 and stayed that way most of the day. This first move ran to 932.89,
then went sideways for the rest of the day, closing at 931.87. If you traded the
(
SPY |
Quote |
Chart |
News |
PowerRating), entry was above 92.82, and that entry carried to 93.79 before the
sideways trading range. That was the .618 retracement zone to last Friday’s
95.30 high, which was the high swing point in play. The E-minis gave you entry
above 923.75 and that carried up to 933, closing at 932.25.
NYSE volume was 1.4
billion, the volume ratio one-sided at 78, and breadth positive at +972. The SPX
and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) each gained +0.9%, while the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was
+1.2%,
(
QQQ |
Quote |
Chart |
News |
PowerRating)s +1.5%, and
(
SMH |
Quote |
Chart |
News |
PowerRating) +1.1%. In the sectors, the
(
BBH |
Quote |
Chart |
News |
PowerRating) was
+3.3%, closing above our second price objective of 112 at 113.44. The CYC was
+1.3%, the RTH +1.5%, while the BKX and XBD were slightly red.
I have discussed the
importance of trade preparation in past commentary, and yesterday’s initial
trade was certainly an example. You need to identify where a trade might set up
and when. You should be able to identify these situations in advance by
anticipating the setup and what other specific points that might make it a
better trade than other setups. You must have a feel for what kind of market you
are in, i.e., can you buy strength with stocks making new highs, (reverse for
sells)? Or is it a buy the weakness, sell the strength market, which we have
been in for four years, and are still in until proven otherwise?
Today will most likely be
slow, as many are taking a long weekend, including yours truly, so the NYSE
floor will be lightly staffed, and this can provide some erratic movement. It’s
trade the first hour and then leave for this corner, unless the market indicates
otherwise. I will look for opening reversals, trap doors, gap pullbacks and
maybe an opening range trade, but on days like this, you can get many head fakes
out of ranges, as the local futures traders can have their fun with some
search-and-destroy trading which runs small traders in and out of positions at
the wrong time. That is not so easy for them when there is a significant
institutional presence on the floor, but pre-holiday they usually can have some
fun at our expense.
Don’t take a long trade
today because you have read 60% of the time the market has been up pre-holiday.
Maybe that’s the case over a number of years, but during this bear market,
that’s been the case only once. The point is have a valid reason based on your
strategies and what you see on your screen.
Hit ’em straight and have
a great weekend. Go, Annika.
PS
Spend a full weekend with me June 20-22.
Click here for details.
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Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Thursday’s NYSE TICKS