What This Big Volume Increase May Mean For Today
What Yesterday’s
Market Action Tells You
The
major indices all pushed higher as new money gets put to work. The
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) gained +1.5%, closing at 986.24 for the ninth straight up
day. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) was 9039, +1.3%, while technology led with both the
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) and
(
QQQ |
Quote |
Chart |
News |
PowerRating) +1.9%. NYSE volume was 1.6 billion, volume
ratio 86, with both the three-day and five-day moving averages above 60, which
is certainly overbought, and breadth was +1689, which now has a medium-term
moving average which is almost the same as it was at the July 24 bottom, except
the market has gotten overextended to the upside. I use a five-, 10- and 20-day
moving average with some other things when relating to breadth.
The real story was
another big day for the semiconductors on a significant increase in volume. The
(
SMH |
Quote |
Chart |
News |
PowerRating)s advanced +3.5%, with
(
KLAC |
Quote |
Chart |
News |
PowerRating) from our list at +3.6% from entry to
intraday high on +50% more volume, which is how I will refer to any of our
trading list action. The semi equipment stocks led, as the two other majors were
up nicely as well.
(
AMAT |
Quote |
Chart |
News |
PowerRating) was +5.2% on a 50% volume increase, and
(
NVLS |
Quote |
Chart |
News |
PowerRating) +5.5% on an 80% volume increase. That stock wasn’t on our list
yesterday because it was +28.4% the previous six days. Shows you what I know.
All of the other semis from the list performed in line with the SPX.Â
The other primary focus
sector, the biotechs, also outperformed the major indices, with the
(
BBH |
Quote |
Chart |
News |
PowerRating)
+2.7%.
(
MEDI |
Quote |
Chart |
News |
PowerRating) and
(
SEPR |
Quote |
Chart |
News |
PowerRating) were our best at +3.7% and +2.3% entry to
high. Our other momentum stocks had really big days, with
(
MERQ |
Quote |
Chart |
News |
PowerRating) +5.0% as
it traded above a very key level (see your weekly chart),
(
TARO |
Quote |
Chart |
News |
PowerRating) +5.2%,
(
SFA |
Quote |
Chart |
News |
PowerRating) +5.6%, with
(
EBAY |
Quote |
Chart |
News |
PowerRating) at +3.4% and
(
FLR |
Quote |
Chart |
News |
PowerRating) +3.6%, so it was pretty
hard to miss if you were involved in any of those stocks.
It was just like fishing
yesterday. When they are running, it’s fun. Thanking you, Generals, and also to
the hedge funds accelerating price in front of the Generals, and also to the
retail getting suckered into these rising prices. Did a light bulb just go off
for those of you that bought index proxies at much lower levels and are thinking
about selling out-of-the-money June calls on the proxies you bought at much
lower prices? If not, maybe you’ve got to buy another light bulb.Â
For
Active Traders
Active traders were
hard-pressed not to catch a few winners yesterday. For you S&P traders, both
the futures and
(
SPY |
Quote |
Chart |
News |
PowerRating)s had an opening reversal long entry, which then put
you immediately above the previous day’s high and made another new rally high.
Your opening reversal trade put you not only above the opening bar, but also
above the previous close and high. That is what I call net plus territory, and
you must get on the train.Â
The first intraday high
was made just before 11:00 a.m., then it was a narrow trading range from 983.50
to 980 until a little mark-up into the close starting about 3:30 p.m. ET. If you
trade the futures or index proxies, you had to catch that early ride. If you
also trade individual stocks and if you kept scrolling all day, there were
multiple opportunities at different times. Net net, it was just an excellent
day.
Today’s
Plan Of Attack
The semis and biotechs
are a primary focus, but they are now at very extended zones and are vulnerable
with sharp downside air pockets. There have been conspicuous last-half-hour big
volume increases in the major semis on Tuesday and for the last hour yesterday,
so that is a definite red alert. There is an agenda. Yesterday’s 31 high for the
SMH is right at a one-year extended volatility band and is now up 78% since the
October 17.32 low, almost eight months ago, which is just under a 10% gain per
month, and that will not be sustained without a good retracement. So, let the
buyer beware, and daytraders should also take the good intraday short setups, as
well as any longs. The SMH is +18% in the last 10 days, and certain individual
stocks have made more significant moves, like NVLS +37% in the past nine days,
and KLAC +27%.
The hedge funds that have
made major plays in front of the Generals during the past 10 days have their
fingers on the sell trigger sitting on excellent gains and are ready to ring the
register, and I’m sure they are selling into this current move when they can,
not when they have to. The analysts were talking about overvaluations when the
SMHs were below 20, and they’re still talking about them +78% later. Follow the
money, folks, not the analysts or the media hype. It’s obvious the Generals were
not listening, and all traders salute them because it’s been a short-term and
daytrading windfall if you are in the semis every day.
Have a good trading day.
PS
Spend a full weekend with me June 20-22.
Click here for details.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS