Weak Month-End/Early April Reflex
What Monday’s Action Tells
You
It was a small gap-up opening for the major
indices and trend up into the intraday highs by 3:00 p.m. ET, but faded in
the
last hour. The
(
DIA |
Quote |
Chart |
News |
PowerRating) opened at 104.60, traded up to 105.21, then closed
at
104.76. The
(
SPY |
Quote |
Chart |
News |
PowerRating) opened at 117.42 vs. the previous 117.14 close and
made
the intraday high of 117.94 before fading to close below the open at 117.31.
Not
good market action. The
(
QQQQ |
Quote |
Chart |
News |
PowerRating), on the other hand, made the 36.61
intraday
high on the 10:45 a.m. bar and closed at 36.34, also below the 36.41 gap-up
opening, so technology was weak for most of the day. Volume on the index
proxies
declined for the third straight session.
NYSE volume was on the soft side at 1.34
billion
shares with the volume ratio 46 and breadth -432. This was a negative
divergence
for the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating), +0.2% to 1174.28, and the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating),
+0.4%
to 10,486. The erratic price action into month-end is no surprise in March.
In
the sectors, the
(
OIH |
Quote |
Chart |
News |
PowerRating) was +1.4% to lead the upside, while the
(
SMH |
Quote |
Chart |
News |
PowerRating),
-0.3%, and CYC, -0.5%, led the red sectors. Banks, brokers and retail were
+0.3%
to +0.7%.
It wasn’t a good travel-range day if you
trade
the major indices based on the gap opening and trend up. However, some
traders
took the RST sell entry for the DIA after the 105.21 high, but the SPY did
not
take out the 03/24 117.99 high to set up an RST with good symmetry. Many of
the
energy stocks opened down which set up Trap Doors, like
(
RIG |
Quote |
Chart |
News |
PowerRating),
(
NBR |
Quote |
Chart |
News |
PowerRating)
and
(
SLB |
Quote |
Chart |
News |
PowerRating), in addition to RST buy patterns, like
(
DO |
Quote |
Chart |
News |
PowerRating). The
(
TLT |
Quote |
Chart |
News |
PowerRating) was
-0.6%, so with interest rates rising, there was weakness in the metals. The
exception, on a longer-term basis, is when the precious metals’ sector rises
in
tandem with interest rates in an inflationary environment when it is
perceived
as a hedge against inflation.
If the early 7:30 a.m. red futures hold,
Dow -34,
S&P -3.60 and Nasdaq -6.50,
Trap Doors will start the day and
RSTs are
in play
if Thursday’s lows are taken out (five-minute chart setups). Short-term RST
position traders want to see the SPY 116.37 and DIA 103.62 lows taken out.
Any
price weakness will be bought into month-end for an early April reflex up.
Have a good trading day,
Kevin Haggerty
P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.