What I Expect This Week
Markets are
generally perverse most of the time and you must always be prepared
to make adjustments, but Friday was a bonus day for traders who were prepared to
play at the various awareness levels that should be basic to you by now. (See
commentary
Friday May 2.) I indicated that the first awareness level was around
the 913 240-EMA zone. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
opened down and hit a 912.35 intraday low on the second bar, then re-crossed the
240 EMA and closed at the top of the range which was 914.45. You either entered
on the re-cross of 913 or else above the signal bar high of 914.45. This entry
ran to 923.24, then pulled back four bars to the 20-period EMA. See your
5-minute chart. The second awareness level was the previous 919.02 high close of
the current rally. Your entry was above the high of this four-bar pullback,
which happened to be 919. If you took the entry above 919 on the first entry
above the 240 EMA, you got lucky. I didn’t like that entry because the SPX had
already rallied almost 7 points from 912.35 so that’s not what I call a
prudent entry.
Awareness levels are fine, but you must use them with good trade logic and an
entry after a quick seven point straight up is extremely aggressive. Friday was
a new closing high for the QQQ
(
QQQ |
Quote |
Chart |
News |
PowerRating) at
28.29. The Dec. 2 intraday high
was 28.79, but closed that day at 28.00. The SPY
(
SPY |
Quote |
Chart |
News |
PowerRating) high close was 94.28
on November 27 and closed Friday at 93.20. Price for the major indices is above
all of the 8, 20, 50, 89, and 200-day EMAs, in addition to my favorite 12-month
EMA. Thanks to the Generals for pushing the April month-end to make it a very
positive month and then some new money put to work on Thursday and Friday, the
first two days of the month.
There is a stretch of significant
resistance starting with the previous highs of 935, 954.28 and 955. That is a
zone of just 3.7% from Friday’s 930.08 close. I expect this zone to be an interim
top and then a decline of at least 5-8 days. This week is also a longer-term
price and time zone of some significance so I will look to take some money off
the table this week, selling a percentage of some much lower-priced long index
proxies into any early strength this week as price pushes this upper resistance
zone. This doesn’t negate taking normal intraday long setups, as they are two
completely different objectives. Yes, I like the 925 breakout, but like the 905
200-EMA re-cross, second entry is the best risk/reward in this market.
NYSE volume picked up a bit to 1.5
billion, the volume ratio .84 and breadth +1677. Both the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) gained 1.5%. The SPYs had no increase in volume from
the previous day while the DIA
(
DIA |
Quote |
Chart |
News |
PowerRating) volume was +11%. The QQQ
(
QQQ |
Quote |
Chart |
News |
PowerRating)
gained 2.2% on a 21% increase in volume as it made a new closing high.
Have a good trading day.
