Watch The Early Action Closely
What Tuesday’s Action Tells
You
There were many crosscurrents yesterday, as
NYSE
volume was 1.49 billion shares, yet the range for the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
was
only 6 points, which is not trader friendly. The SPX at +0.1% and the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) -0.05% were basically a push, while the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s and Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) were a bit better at +0.6% and +0.5%. The volume ratio was
neutral at 53, which is also an indication of the portfolio jockeying as the
Generals position themselves for 2004. Breadth was also neutral at +145,
with
the 4 MA at only +355 in spite of the higher highs.
Some cyclicals saw a bit of selling
yesterday,
like
(
PD |
Quote |
Chart |
News |
PowerRating),
(
CAT |
Quote |
Chart |
News |
PowerRating),
(
AA |
Quote |
Chart |
News |
PowerRating),
(
DD |
Quote |
Chart |
News |
PowerRating) and
(
DE |
Quote |
Chart |
News |
PowerRating), while some money
found
it’s way into some retail stocks like
(
KSS |
Quote |
Chart |
News |
PowerRating) +3.9%,
(
MAY |
Quote |
Chart |
News |
PowerRating) +3.6%,
(
ANN |
Quote |
Chart |
News |
PowerRating) +3.2%,
(
TGT |
Quote |
Chart |
News |
PowerRating) +3.1%M
(
LOW |
Quote |
Chart |
News |
PowerRating) +2.8% and
(
WMT |
Quote |
Chart |
News |
PowerRating) +2.2%. This
puts
both sectors on the daytrading plan today, both short and long. PD, which
has
gone from 22.90 on Oct. 10, 2002, to a 79.42 high on Dec. 29, 2003, has
traded
in an 80 – 76 box for the past four days, so that is front and center on the
short watch in case the Generals follow through. PD was -2.1% yesterday on
3.4
million shares, the most volume this year vs. the 30-day average volume of
1.4
million. If they take it out the top, I have no interest, but it is on the
daily
short list now because the Generals could cash in some chips here, and there
is
plenty of downside room.
The cyclicals have had a very sharp run-up
since
Nov. 20, with the XLB gaining +16.5% in 29 trading days and has certainly
benefited from the lower US Dollar, as well as the improved economic
outlook.
Yesterday the Fed was out trying to dampen concerns about the US Dollar
weakness, and one of the US Fed Governors said the risk of a Dollar crisis
is
low. Jawboning for sure. With this, bonds
(
TLT |
Quote |
Chart |
News |
PowerRating) were +1.1%, and gold was
-2.0% (XAU). Net net, this is a lead up for maybe some more short-term
cyclical
stock profit-taking as Generals change their allocations a bit.
The other thread from yesterday’s market
action
was the airline gains, but I don’t touch them and believe that you should
rent
them, not buy them. Obviously, I haven’t had many happy experiences trading
them, so I just stay away.
| size=2> |
Wed.
12/31 |
Thurs.
1/1 |
Friday
1/2 |
Monday
1/5 |
Tuesday
1/6 |
| color=#0000ff>Index |
|
|
|||
| color=#0000ff>SPX |
|
|
|
||
| color=#0000ff>High |
1112.56
|
H
|
1118.85
|
1122.22
|
1124.48
|
| color=#0000ff>Low |
1106.21
|
|
1105.08
|
1108.48
|
1118.44
|
| color=#0000ff>Close |
1111.92
|
O
|
1108.49
|
1122.22
|
1123.67
|
| color=#0000ff>% |
+0.2
|
|
-0.3
|
+1.2
|
+0.1
|
| color=#0000ff>Range |
6.4
|
L
|
13.8
|
13.7
|
6.0
|
| color=#0000ff>% Range |
89
|
|
25
|
100
|
87
|
| color=#0000ff>INDU |
10454
|
I
|
10410
|
10544
|
10539
|
| color=#0000ff>% |
+0.2
|
|
-0.4
|
+1.3
|
-.05
|
| color=#0000ff>Nasdaq |
2003
|
D
|
2007
|
2047
|
2057
|
| color=#0000ff>% |
-0.3
|
|
+0.2
|
+2.0
|
-0.5
|
| color=#0000ff>QQQ |
36.46
|
A
|
36.40
|
37.12
|
37.32
|
| color=#0000ff>% |
-0.3
|
|
-0.2
|
+2.1
|
+0.6
|
| color=#0000ff>NYSE |
|
Y
|
|
|
|
| color=#0000ff>T. VOL |
985
|
|
1.1
|
1.50
|
1.49
|
| color=#0000ff>U. VOL |
521
|
|
593
|
1.13
|
778
|
| color=#0000ff>D. VOL |
434
|
|
526
|
364
|
688
|
| color=#0000ff>VR |
52
|
|
53
|
76
|
53
|
| color=#0000ff>4 MA |
66
|
63
|
59
|
59
|
|
| color=#0000ff>5 RSI |
89
|
74
|
84
|
87
|
|
| color=#0000ff>ADV |
1561
|
1745
|
2242
|
1724
|
|
| color=#0000ff>DEC |
1698
|
1503
|
1073
|
1579
|
|
| color=#0000ff>A-D |
-137
|
+242
|
+1169
|
+145
|
|
| color=#0000ff>4 MA |
+770
|
+606
|
+458
|
+355
|
|
| color=#0000ff>SECTORS |
|
|
|
|
|
| color=#0000ff>SMH |
-0.5
|
-0.2
|
+3.6
|
+0.6
|
|
| color=#0000ff>BKX |
+0.1
|
-0.6
|
+0.8
|
+0.2
|
|
| color=#0000ff>XBD |
0
|
-0.4
|
+1.2
|
+0.4
|
|
| color=#0000ff>RTH |
+0.1
|
-1.9
|
+0.4
|
+1.5
|
|
| color=#0000ff>CYC |
+0.1
|
-0.5
|
+1.7
|
-0.5
|
|
| color=#0000ff>PPH |
+0.5
|
+0.7
|
+1.1
|
-0.2
|
|
| color=#0000ff>OIH |
-1.3
|
-0.3
|
+1.2
|
-0.1
|
|
| color=#0000ff>BBH |
-0.5
|
+0.4
|
-0.5
|
+0.1
|
|
| color=#0000ff>TLT |
-0.4
|
-1.1
|
-0.2
|
+1.1
|
|
| color=#0000ff>XAU |
-0.8
|
+0.6
|
+3.1
|
-2.0
|
For Active
Traders
Yesterday, the SPX went sideways in an
ascending
triangle until after 2:00 p.m. ET, and it looked like they might run it on
the
breakout, but the SPX only went from 1122 to 1124.46, closing at 1123.67.
The
(
SMH |
Quote |
Chart |
News |
PowerRating)s did have a good Trap Door move after the early down, running from
a
42.64 entry level (after making the intraday lows from 10:00 a.m. – 10:20
a.m.)
to a 43.40 high, closing at 43.15.
Today’s
Action
For today, watch the early action closely, as
you
should do every day, and try to pick up the sector flow and focus on it both
long and/or short, as I expect the crosscurrents to continue as the Generals
reposition their portfolios. There are also some interesting
patterns/situations
from the 3-Day Wake Up Call list, like
(
VRSN |
Quote |
Chart |
News |
PowerRating) coming out of a trading
range
since June on increased volume. Also, there is
(
BRCD |
Quote |
Chart |
News |
PowerRating),
(
IPG |
Quote |
Chart |
News |
PowerRating),
(
FON |
Quote |
Chart |
News |
PowerRating),
(
MU |
Quote |
Chart |
News |
PowerRating),
(
ORCL |
Quote |
Chart |
News |
PowerRating),
(
EMC |
Quote |
Chart |
News |
PowerRating) and
(
FLEX |
Quote |
Chart |
News |
PowerRating), all of which
have
narrow-range patterns with price bumping the highs. On these kinds of
patterns,
I look for a daytrade setup that looks good, and you can get lucky if they
take
it out of the top of the daily chart range.
Have a good trading day,
Kevin Haggerty
