Watch This Business Cycle Early-Warning Stock
The market action
yesterday told us nothing. The SPX traded in a 3.7 point range
between 1162.93 -1159.19 until the FOMC nonsense volatility on the expected rate
increase and statement. However, after the move, the SPX 1166.89, price reversed
the 1163.50 primary resistance level and provided daytraders with a good short
entry which carried down to the 240-EMA and 1156.71 intraday low before closing
at 1161.17. The 200-day EMA is 1160.11. The SPX continues to falter at the
1160-1165 zone, with the high close so far being 1162.16. The SPX, 1161.17, and
Dow, 10257, finished virtually unchanged at -.09% and +.05%. The QQQQ was +0.5%
to 35.30 and the Nasdaq, +0.2% to 1933.
NYSE volume was 1.67 billion shares with the
volume ratio of 46 and breadth -76. The 4 MA of the volume ratio is neutral at
50 and the 4 MA of breadth is +209, so there is no short-term overbought or
oversold condition to take advantage of.
In the primary sectors, the OIH declined -2.7%
and XLE, -2.3%, as crude oil was -2.8% on the day to 49.50.
The CRB continued to show weakness, losing
-1.1% to close at 299.69, down from
about 325 in mid-March. The rest of the primary sectors were mixed, with the RTH
,+0.6%; PPH, +0.4%; and SMH, +0.3%, while the XBD was -0.3% and BKX, -.03%.Â
With the TLT advancing +0.3% despite the expected rate increase, the XAU was
+1.1%.
Copper is an early warning to business cycle
weakness or strength and Phelps Dodge
(
PD |
Quote |
Chart |
News |
PowerRating) has just broken down from a
rising wedge on significant volume, so if it develops a 1,2,3 top on any
retracement to the high, it could be an excellent short play and is certainly a
red alert for your overall portfolio (see PD chart).
There is a stronger Fibonacci time zone
next week, so any weakness or strength into next week has a good probability for
a short-term reversal move. If the SPX remains around the 1160-1165 range into
next week, expect a breakout of that range in either direction.
Have a god trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.
