Who’s On 1st?
Green
turned to red yesterday with
almost the same statistics. NYSE volume was again about 1.7 billion, a volume
ratio flip-flop to just 18, while breadth was -1178 vs. +1221 on Tuesday. All of
the major indices declined anywhere from 2.2% to 2.4%. The SPX
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PowerRating)
intraday high was 851.93, which is below the 20-day EMA now at about 858, and
also the 50-day EMA at 890. The SPX can’t make a higher swing point high unless
it trades and closes above 856.12, and of course, it must clear the 20-day EMA
and then it runs into the 870 confluence mentioned
yesterday. The Generals must show up to make that happen.
The 848 .618 retracement
level and the 856 Square of Nine number is the upper boundary for the past nine
days for the SPX. Depending on what Thursday brings, an inverse
head-and-shoulders pattern is taking form for the SPX if the 800 low holds.
Unless I see more than the follow through that we saw yesterday, the 776 magnet
is likely to get taken out.
Needless to say, the
major indices all had reversal days with closes in the bottom of their ranges.
Not what is expected if the Generals were the main force on Tuesday, so you must
assume programs and short covering were the real catalysts. I doubt that
surprises any of you.
The SPX put in a two-day
head-and-shoulders top which was elected with a break below the neckline at 837.
(See your five-minute chart.) The measured objective is 822, which is in
confluence with the .618 retracement between 852 and 800 of 820. Any early red
Thursday makes this the first awareness zone.
Most of the major sectors
like the BKX, BTK, XBD, RLX and FPP reversed all or most of Tuesday’s gains
which certainly makes a statement, and not a good one. The semiconductors closed
flat, but were green all day until the final thrust down. The
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SMH |
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PowerRating)s made an
intraday high of 21.43, which is right at the 20-day EMA of 21.40, but closed
down at 20.31. That’s not what I like to see when the volume expanded to 11.5
million shares, the most since Aug. 20.
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AMD |
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PowerRating) disappointed after the close
with a shortfall, and I see that it traded down to 4.20, or -22% on light volume
in Island after hours.
As I am doing this late
Wednesday for Thursday morning, I can’t see the effect on the other semis in
pre-market trading, but I am doing my homework on AMD for a possible longer-term
option strategy if my findings are positive, which simply means will the company
stay alive.
The SPX is in limbo for
me right here. It needs price and volume from the Generals, not programs, to get
past some overhead resistance, and I get interested on the downside below
800.
Have a good trading day.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS